tag:blogger.com,1999:blog-64546241893833279082017-09-25T18:24:16.663+01:00The Heretic's Guide to Global Finance: Hacking the Future of MoneyAnarchic Adventures in Arts, Activism, Anthropology and Alternative EconomicsBrett Scottnoreply@blogger.comBlogger64125SuitpossumFragmentsOfFinancialSubversionhttps://feedburner.google.comtag:blogger.com,1999:blog-6454624189383327908.post-27337030551503349732016-10-02T19:33:00.001+01:002016-10-09T19:07:29.355+01:00The Activist Hedge Fund <div dir="ltr" style="text-align: left;" trbidi="on"><div class="MsoNormal" style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://1.bp.blogspot.com/-tqUAti-NJ04/V6-0M3jAvfI/AAAAAAAAC_4/YM7RgepuEKE6QcPUnZYdl4vLbaNdU3fTACLcB/s1600/Robin%2BHood%2BCooperative.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="332" src="https://1.bp.blogspot.com/-tqUAti-NJ04/V6-0M3jAvfI/AAAAAAAAC_4/YM7RgepuEKE6QcPUnZYdl4vLbaNdU3fTACLcB/s400/Robin%2BHood%2BCooperative.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><b>TRADERS (photo: Harri Homi)</b></td></tr></tbody></table></div><div class="MsoNormal" style="text-align: justify;"><hr /><i>Note: This essay was commissioned in 2015 by VICE USA, who then neglected to publish it. Apologies to everyone who took the time to give me quotes</i><br /><hr /><br /><a href="https://en.wikipedia.org/wiki/Hedge_fund">Hedge fund</a> traders are financial mercenaries. Like all mercenaries, they are hired by rich and powerful people. Unlike some mercenaries, however, their lives are never in danger. Rather, they settle in upmarket offices with wood-paneled boardrooms and sparkling water, getting extraordinarily wealthy by betting on anything from Apple shares to oil futures to distant coalmines operated out of Indonesia.</div><div class="MsoNormal" style="text-align: justify;"><o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">This, though, is no normal hedge fund. <a href="http://robinhoodcoop.org/">Robin Hood Coop</a>&nbsp;is an activist hedge fund run by anarchic artists.<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">And this is no ordinary office. It has no wood panelling and no sparkling water. In fact it barely has running water at all, being a graffiti-strewn ex-slaughterhouse in Milan squatted by a radical arts group called <a href="http://www.macaomilano.org/">Macao</a>. Below us in the hall is a naked woman painted blue wearing a gas mask, dancing to the sonic violence of industrial death-metal music. Next door is a punk street-theatre collective manufacturing artificial vomit in buckets to throw at a protest. There are empty cartridges of police teargas on our table, now used to hold marker pens.<o:p></o:p><br /><br /><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://2.bp.blogspot.com/-YdK0s_rdNds/V6-3eyenkRI/AAAAAAAADAY/PinQeAbOG6AmZyyoy1mLjE7K8fc1UoJVACLcB/s1600/Macau%2BMilan.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="332" src="https://2.bp.blogspot.com/-YdK0s_rdNds/V6-3eyenkRI/AAAAAAAADAY/PinQeAbOG6AmZyyoy1mLjE7K8fc1UoJVACLcB/s400/Macau%2BMilan.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><b>MACAU, MILAN&nbsp;</b><b style="font-size: 12.8px;">(photo: Harri Homi)</b></td></tr></tbody></table></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">The term ‘hedge fund’ is used loosely. Strictly speaking, Robin Hood is a Finnish <i>cooperative</i>, and you do not need to be rich to join it. You become a member of the co-op by buying a share for 30 euros. They take that money and use it to bet on the US stock markets. To do so, they use an algorithm called ‘The Parasite’, which sucks in lots of stock market data and uses it to make trading decisions. Any profits they make from this trading are then steered back to their members, but also to a communal fund that supports rebellious projects that mess with the mainstream. <o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">The co-founder is the unassuming Finnish political economist Akseli Virtanen. He opens the meeting up with a playful grin, extending his arms and saying, “<i>Welcome to the wild side of finance</i>.”<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">*<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;">Robin Hood came to life in 2012 when Askeli and a team of artists and critical academics joined forces at the University of Aalto outside Helsinki in Finland. The fund was envisaged as a piece of ‘economic performance art’ and the team went out to raise money from scraggly freelance workers and other lowly chancers. They somehow managed to collect over €500 000. By financial sector standards that’s a pretty tiny amount of money – many funds have billions under management – but it was enough to make the university management very nervous. <i>You guys are artists, not financial traders</i>. Management wanted the project to cease.<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="separator" style="clear: both; text-align: center;"></div><div class="MsoNormal" style="text-align: justify;">Rather than conforming, Akseli got rebellious. He stepped down from the university and Robin Hood went independent. Since then they have focused on building up a global support network of counter-cultural weirdos extending from Helsinki to California.<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">This network grows through the tradition of Robin Hood’s ‘offices’, where the team meets at different locations around the world to hold workshops in conjunction with a local host group. The first of these offices I attended was in late 2014 in Dublin. It took place in an old abandoned bank, hosted by an assortment of Irish open-source culture devotees. Unlike the closed, secretive and exclusive character of normal hedge funds, Robin Hood’s offices are explicitly open and collaborative. It is not like a private company with confidentiality agreements, and guests do not have to be signed in by security personnel. <o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://3.bp.blogspot.com/-05H6TR2fcKI/V6-y-sbadyI/AAAAAAAAC_w/94KwRNnHsBszOtdBApx-mdNahNlRIrxMgCLcB/s1600/The%2BActivist%2BFund.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="332" src="https://3.bp.blogspot.com/-05H6TR2fcKI/V6-y-sbadyI/AAAAAAAAC_w/94KwRNnHsBszOtdBApx-mdNahNlRIrxMgCLcB/s400/The%2BActivist%2BFund.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><b style="font-size: 12.8px;">(photo: Harri Homi)</b></td></tr></tbody></table><br />The collective is trying to meld together the tools of high finance with the underdog culture of the radical activist underground, and that unusual combination has piqued the interest of many. In the background of the Milan squat, propped against the frame of a cracked window, is the legendary Italian ‘autonomist’ <a href="https://en.wikipedia.org/wiki/Franco_Berardi">Franco ‘Bifo’ Berardi</a>. He’s been a prominent figure in anarchist worker politics from the 1960s, rallying people together to create cooperative enterprises and pirate radio stations outside the market economy. Scattered around the room are philosophers of algorithms, hacker culture and digital technology. They mix with coders, designers and creative types like the exuberant Portuguese artist Ana Fradique, who co-manages the fund.</div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">Ana describes Robin Hood as ‘artivism’ – a mix of arts and activism. Indeed, the meetup feels like a synthesis between an intellectual salon, a practical hackathon and a political campaign meeting. On the whiteboard is a scrawled web of lines drawn in marker pen, sketches of company structures and money flows. The team is attempting to explain the outlines of the Robin Hood fund to local Milan activists who are curious about how it works.<o:p></o:p><br /><br /><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://2.bp.blogspot.com/-b2JXJe8kfq4/V6-19-mhbUI/AAAAAAAADAI/BMmGkSLBVywPsnEvsglapBAI7MpZa3-FgCLcB/s1600/Robin%2BHood%2BPlanning.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="332" src="https://2.bp.blogspot.com/-b2JXJe8kfq4/V6-19-mhbUI/AAAAAAAADAI/BMmGkSLBVywPsnEvsglapBAI7MpZa3-FgCLcB/s400/Robin%2BHood%2BPlanning.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><b>SUBVERSIVE SCHEMATICS&nbsp;</b><b style="font-size: 12.8px;">(photo: Harri Homi)</b></td></tr></tbody></table><br /></div><div class="MsoNormal" style="text-align: justify;">Akseli takes the lead. “We have, on the one hand, a financialized economy in which the financial sector parasites off almost everything. On the other hand, we have increasing precariousness of labour, an erosion of worker protections. People who sweat in mines or care for the sick get paid almost nothing and live in anxiety, whilst traders who push money around earn enormous sums. In their search for returns big investors seek to enclose and commoditise whatever remaining public commons exist.”<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">Financial funds often name themselves after mythological figures – like the colossal <a href="http://www.cerberuscapital.com/">Cerberus Capital Management</a> styling itself after the three-headed hellhound of the underworld – but the mythic figure of Robin Hood doesn’t fit comfortably within normal financial culture. In one version of the legend he’s a guy who steals from the rich to give to the poor, a champion of economic redistribution. In another, he’s a guy who dares to poach deer in the king’s private forests, a rebel against privatisation of common land. Redistribution, equality and protection of public commons? These are not things that financial institutions normally specialise in. <o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">“Our fund delves into the heartlands of Big Finance and makes money using their own rules,” says Akseli, “and then we distribute the returns back to precarious, insecure workers.”<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">That sound nice on paper, but does this algorithmic trading actually work? <i>The Parasite</i> algorithm consists of nothing but lines of code, but it is a core member of the team. They feed it with a $15 000-per-year data stream from the New York Stock Exchange and NASDAQ. In financial jargon, it is a ‘trend-following<i>’ </i>algorithm, which means the Parasite digests the data and seeks to identify herding behaviour among big players in the stock-market, and then makes trades to try profit from that. Robin Hood has achieved double-digit returns with this strategy in both 2013 and 2014. It’s too early to tell if this performance will continue – and 2015 looks to be a leaner year – but it doesn’t seem too bad for a group of relative financial amateurs.<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br /><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://2.bp.blogspot.com/-gEbISST90NE/V91ee0-BPOI/AAAAAAAADBQ/LGQYST3-Tl46eUv9OoxtjpkO6BeGR3zDwCLcB/s1600/Collaborators.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="332" src="https://2.bp.blogspot.com/-gEbISST90NE/V91ee0-BPOI/AAAAAAAADBQ/LGQYST3-Tl46eUv9OoxtjpkO6BeGR3zDwCLcB/s400/Collaborators.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><b style="font-size: 12.8px;">(photo: Harri Homi)</b></td></tr></tbody></table><br /></div><div class="MsoNormal" style="text-align: justify;">Serbian activist Branko Popovic is sceptical. He’s in Milan to take part in Mayday protests, and has ambled into the room by chance. His day-to-day life involves fighting housing evictions and squatting public theatres due to be turned into luxury apartments. In comparison to such concrete actions, Robin Hood’s financial trickery seems abstract. “I understand you’re trying to be like a vampire on the market”, he says, “but why be a vampire on vampires? They have nothing to give us.” <o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">Branko’s sentiment echoes an age-old tension within radical movements. Do you attempt to work within mainstream structures, or do you attempt to completely bypass them? Robin Hood takes a lot of flak from activists who find the idea of taking an active part in the financial system repugnant. Radical movements often start by imagining the current world as not being the way it should be, and then adopt a stance of defiant rejection, trying to live as if it wasn’t there, avoiding contact with it and seeking purity in small communities of like-minded people.<span style="font-family: &quot;geneva&quot;; font-size: 12.0pt; line-height: 107%;"><o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">We saw this during the Occupy Movement. Idealists took to the streets in an attempt to reclaim some public commons, but never attempted to actually occupy the financial institutions themselves. The insults they threw at the banksters did nothing to break down the insider-versus-outsider barrier that financial workers actually rely upon to maintain their powerful mystique. Now it is five years later and the sector has drifted out of the public eye, back to business-as-usual.<span style="font-family: &quot;geneva&quot;; font-size: 12.0pt; line-height: 107%;"> <o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">Under Akseli’s patient response to Branko there is frustration.<span style="font-family: &quot;geneva&quot;; font-size: 12.0pt; line-height: 107%;"> </span>“There are no financial virgins. Everyone is implicated in the system in some way or another, and we embrace that. <i>We believe in this world and not in some other</i>. In this world the high priests of finance tell you that you cannot touch their temples. But if something is sacred you must profanate it to bring it back down to earth. The best way to do that is to reach out and touch it, to make it dirty. We want to be irreverent and scandalous.”<span style="font-family: &quot;geneva&quot;; font-size: 12.0pt; line-height: 107%;"><o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">*<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://3.bp.blogspot.com/-DLMLc1lCUzQ/V91fb906sBI/AAAAAAAADBY/w58vG-eePn8BcqMJcjEpsv_radgJ1eo7ACLcB/s1600/Board%2BMeeting.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="332" src="https://3.bp.blogspot.com/-DLMLc1lCUzQ/V91fb906sBI/AAAAAAAADBY/w58vG-eePn8BcqMJcjEpsv_radgJ1eo7ACLcB/s400/Board%2BMeeting.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><b>BOARD MEETING&nbsp;</b><b style="font-size: 12.8px;">(photo: Harri Homi)</b></td></tr></tbody></table>This is not the first time I’ve heard the group being criticised. The project came up as a topic of discussion at a Berlin technology activism meetup that I attended. Robin Hood was treated with a mix of bemusement and scepticism, and a prominent member of the group was dismissive. “It has an element of fun, but let’s face it, it’s just a normal financial fund trading like any other. It’s not an emancipatory project to help workers. It’s just a kind of joke.”<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">Perhaps being a joke is part of the point. Pekko Koskinen is another member of the Robin Hood collective. In Finland he is part of the <a href="http://www.todellisuus.fi/#new-page">Reality Research Center</a>, where he designs ‘reality games’ – games situated in real world settings with hidden rules known only to participants. He views Robin Hood as a type of mischievous game to explore the markets. “People often want clear boundaries between good and evil, professional and amateur, Right and Left, but Robin Hood breaks those binaries. We’re creating a Trojan horse to warp the​ rules of the market. Activists making a hedge fund is a bit like building a home-made surfboard to ride monster waves with professional surfers who say you can't paddle out with them. Sorry, but we’re going to ride.”<o:p></o:p><br /><br /></div><div class="MsoNormal" style="text-align: justify;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://4.bp.blogspot.com/-rh8rZrjLVkE/V6-1WAb_wMI/AAAAAAAADAA/cgm1-jvZWKQ8asEuRH9xxz2XXM5G3TMzQCLcB/s1600/The%2BActivist%2BHedge%2BFund%2B2.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="332" src="https://4.bp.blogspot.com/-rh8rZrjLVkE/V6-1WAb_wMI/AAAAAAAADAA/cgm1-jvZWKQ8asEuRH9xxz2XXM5G3TMzQCLcB/s400/The%2BActivist%2BHedge%2BFund%2B2.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><b>LUXURY APARTMENT&nbsp;</b><b style="font-size: 12.8px;">(photo: Harri Homi)</b></td></tr></tbody></table><br /></div><div class="MsoNormal" style="text-align: justify;">Reading through Robin Hood’s official documents, one begins to feel that they’ve got the spirit of a joker making fun of the pretences of high finance. They mimic and mock the language to create a deviant dialect. Their May 2015 ‘<a href="http://www.futureartbase.org/wp-content/uploads/2015/04/Robin-Hood.Grey-Paper-April-2015.pdf">Grey Paper</a>’ reads like something produced in collaboration between Goldman Sachs and Occupy Wall Street: <o:p></o:p></div><div class="MsoNormal" style="margin-left: .5in; text-align: justify;"><i>"Robin Hood will issue €20 million of collateralized equity notes, called ‘Hood notes’. All investment monies from note issuance will be turned over to the Parasite for investment… Note holders, as denizens of Robin Hood, will continue to design, propose, vote-on, and execute mutual equity programs with all shared proceeds."<o:p></o:p></i></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">Geert Lovink of the <a href="http://networkcultures.org/">Institute of Network Cultures</a> in Amsterdam is a keen observer of the team. “Robin Hood is a financial hack, a subversive installation that takes the standard conventions set by the big financial institutions and bends them.” It’s a tradition in radical activism that can be traced back to movements like the <a href="https://en.wikipedia.org/wiki/Situationist_International">Situationist International</a>, or the absurdist clowns of the Dada movement. The Dada artist Marcel Duchamp took a urinal and called it <i>Fountain</i>. Robin Hood takes a hedge fund and calls it a liberator of precarious workers.<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">For Geert, though, the tantalizing element of the fund is that it can actually make money to help other radical projects. “In a world of austerity, the funding for arts, culture and political activism is being cut. Robin Hood offers us a new source of funds, and it does so by using the vehicles of the very financial institutions that caused the austerity in the first place”. <o:p></o:p><br /><br /></div><hr /><div style="text-align: center;"><i>NOTE: If you'd like to support my ongoing Creative Commons writing, please consider buying me a <a href="http://suitpossum.blogspot.co.uk/p/support.html">virtual beer</a></i></div><hr /><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">For a group to apply for a share of the profits made by Robin Hood, though, it must operate outside the ‘work-yourself-to-death-so-you-can-consume-yourself-to-death’ logic of the mainstream economy. And Robin Hood has just announced their first round of distributions. They’ve given €5000 to the autonomous arts space Casa Nuvem in Rio de Janeiro, €6000 to the activist broadcaster Radio Schizoanalytique in Greece, and €4000 to the <a href="http://commonstransition.org/">Commons Transition</a> project run by the P2P Foundation alongside the Catalan Integral Cooperative (CIC). <o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">The CIC is a network of Catalonian cooperatives that was co-founded by bad-boy Spanish bank-activist <a href="http://www.vice.com/en_uk/read/be-the-bank-you-want-to-see-in-the-world-0000626-v22n4">Enric Duran</a>. €4000 is not massive money, but it’s a welcome boost for a project normally excluded from mainstream funding. "The CIC is a very inspirational commons-based economic network”, says Stacco Troncoso of the P2P Foundation. “We want other community groups around the world to learn from it, so we’re using the funding from Robin Hood to build training materials based on the CIC’s experience for widespread distribution."<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">*<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;">Akseli is impatient though. Giving away €15000 in trading profits to rebel economic groups is cool, but it is still too small. A key purpose of the Milan workshop, therefore, is to introduce a work-in-progress that the team refers to as ‘Robin Hood 2.0’. According to Akseli, 2.0 will be “even more monstrous” than the first incarnation. Rather than being based out of Finland, he wants to transform Robin Hood into a decentralized global crypto-fund, built using the underlying <i>blockchain</i> technology of the cryptocurrency Bitcoin.<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">Bitcoin uses a public database – called a blockchain – to record the creation and movement of digital tokens between participants in the Bitcoin network, and thereby keep track of those participants’ token balances. Unlike a bank that keeps a centralised private database to keep score of your money, the Bitcoin blockchain is collectively maintained by a decentralized network of peers. Such a blockchain, though, needn’t only be used to record the existence and movement of digital currency tokens. It could also be used to record the existence and movement of shares… like shares in an activist hedge fund.<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">Akseli has roots in the radical tradition of worker cooperatives, but he believes that the old-school cooperative is “a form that belongs to the last century”. He believes they can be updated to the current century by using blockchain-based ‘crypto-equity’.</div><div class="MsoNormal" style="text-align: justify;"><br /><div class="separator" style="clear: both; text-align: center;"></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://4.bp.blogspot.com/-cuE4yaeIAWM/V6-2TQQRROI/AAAAAAAADAQ/_2sx2ZtT6IUX11KFMR3nQANRsRGnr2rNgCLcB/s1600/Robin%2BHood%2BCoop%2B2.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="332" src="https://4.bp.blogspot.com/-cuE4yaeIAWM/V6-2TQQRROI/AAAAAAAADAQ/_2sx2ZtT6IUX11KFMR3nQANRsRGnr2rNgCLcB/s400/Robin%2BHood%2BCoop%2B2.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><b>STARE INTO THE BLOCKCHAIN&nbsp;</b><b style="font-size: 12.8px;">(photo: Harri Homi)</b></td></tr></tbody></table><br /></div><div class="MsoNormal" style="text-align: justify;">Dan Hassan is a software engineer who has joined the team to test out the feasibility of Robin Hood using blockchain technology. “Old co-ops allowed co-operation between small groups of people, but with crypto-equity we can scale that up” he says. He is part of the burgeoning blockchain community that includes groups like <a href="https://ethereum.org/">Ethereum</a>, and he has come to Milan to run a session explaining blockchain basics. “A blockchain is a collectively maintained database controlled by no one person. You bring it to life by getting a network of people to all run the same software, and that software has rules for creating a shared account of reality between those people. The more people involved the stronger it is. Imagine a global network of people using this technology to organise themselves into huge digital co-operatives that facilitate mass collaboration.”<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">So, shares in an activist hedge fund could be created and moved around using such a system, but building a next-generation anarchic crypto-entity to take on Wall Street still seems like a pretty tall order. The team has done most work thus far as unpaid volunteers, but to create this ‘Robin Hood 2.0’ will be a full-time job. And that requires an injection of capital to pay proper salaries. <o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">So what do you do when you need to kickstart a new, risky company? You get <i>venture capitalists</i> involved, of course. The team is on the prowl for a couple million dollars in seed funding so they can start developing 2.0.<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">But there are reservations. Getting slick venture capitalists on board potentially brings a different political dynamic. VC investors want to see big returns, and how will that jell with the original intent of giving away the profits to countercultural groups? I ask Akseli, but his hacker mentality is already fired up with the idea of messing with something new. “Robin Hood 1.0 was able to assimilate the hedge fund structure, so why not also do it for the venture-funded start-up structure. It’s too good not to try. We do mimicry of Wall Street hedge funds and mimicry of Silicon Valley start-ups”.<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">Underlying this is a realisation that the power dynamics of Big Finance are shifting. In the US, it is not just the banks and funds of Wall Street in the finance game. There are also the West Coast digital tech gods, waging a new cold war on the traditional financial markets, armed with apps, payment gadgets and internet monopolies. If the waves of power are changing, a subversive surfer might reposition themselves, and that is what Robin Hood is doing.<o:p></o:p></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;">The team still has the feel of innocents, though, feeling out the contours of the dark side of money. The nervous energy is tangible, and each night in Milan they try to bring it back down to earth, standing on the balcony of the Macao squat, drinking beers, smoking cigarettes. Pekko methodically describes how to make whisky. Finns enjoy such practical matters. They are notoriously quiet, but underneath it lies a self-contained disdain for information that is unnecessary. As core team member Harri Homi wryly confides, “It’s great to break open the black box of finance. But my life I like to just live and leave it as a black box. I do not understand why I do things.”<o:p></o:p></div><br /><div class="MsoNormal" style="text-align: justify;"><a href="https://en.wikipedia.org/wiki/Long-Term_Capital_Management">Long Term Capital Management</a> was an enormous hedge fund that famously went bust in 1998 after the advanced financial theories they based their trading on ended up being out of sync with the reality of the world. Robin Hood faces a similar dynamic. Their radical financial theories could either be complete revelation, or complete hocus-pocus, and there’s no guarantee that their Parasite algorithm carries on working. In this gambit to fuse together algorithmic trading, blockchain technology, Silicon Valley and artistic activism into one epic hack of the financial system, the team in in unchartered waters.<o:p></o:p><br /><br /><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://3.bp.blogspot.com/-_BvGosftd94/V91ew9PZCZI/AAAAAAAADBU/ydjumahRpvYxUexSh87kzyC6V7fcOzwiwCEw/s1600/Late%2BNight%2Bat%2BThe%2BOffice.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="640" src="https://3.bp.blogspot.com/-_BvGosftd94/V91ew9PZCZI/AAAAAAAADBU/ydjumahRpvYxUexSh87kzyC6V7fcOzwiwCEw/s640/Late%2BNight%2Bat%2BThe%2BOffice.jpg" width="425" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><b>LATE NIGHT AT THE OFFICE&nbsp;</b><b style="font-size: 12.8px;">(photo: Harri Homi)</b></td></tr></tbody></table><div class="separator" style="clear: both; text-align: center;"></div><br /><div class="MsoNormal" style="text-align: justify;"><br /></div><hr style="text-align: left;" /><div style="text-align: center;"><i>NOTE: If you'd like to support my ongoing Creative Commons writing, please consider buying me a&nbsp;<a href="http://suitpossum.blogspot.co.uk/p/support.html">virtual beer</a></i></div><hr style="text-align: left;" /><div class="MsoNormal" style="text-align: justify;"><br /></div></div></div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/SGAJUFEAYIg" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com2http://suitpossum.blogspot.com/2016/10/the-activist-hedge-fund.htmltag:blogger.com,1999:blog-6454624189383327908.post-20438461381831418572016-03-27T20:11:00.000+01:002016-05-17T11:59:32.786+01:00The dark side of digital finance: On financial machines, financial robots & financial AI<div dir="ltr" style="text-align: left;" trbidi="on"><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://1.bp.blogspot.com/-mGBzjSdPqJI/VuFVcrZAS4I/AAAAAAAAC2w/rwojVZumgmc/s1600/Digital%2BBanking%2B%25282%2529.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="281" src="https://1.bp.blogspot.com/-mGBzjSdPqJI/VuFVcrZAS4I/AAAAAAAAC2w/rwojVZumgmc/s400/Digital%2BBanking%2B%25282%2529.png" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><br /></td></tr></tbody></table><hr /><i>Note: I published a shorter version of this in Nesta's magazine The Long+Short as <a href="http://thelongandshort.org/machines/automation-and-the-future-of-personal-finance">You Are the Robots</a>. This is a modified and extended version, published under Creative Commons</i><br /><hr /><div style="text-align: justify;">A banker in 1716 had two main tools: a ledger book and a quill pen. A customer – perhaps a prominent carpenter – would enter a branch, request a withdrawal or make a deposit, and the banker would make a careful note of it within the ledger, editing the customer's previous entry to keep authoritative score of exactly what the bank promised to them.<br /><br /><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://3.bp.blogspot.com/-nztHsUdvxEw/VuFWRX6LCfI/AAAAAAAAC28/hRYufPy1xeE/s1600/Bank%2BData%2BCentre.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="332" src="https://3.bp.blogspot.com/-nztHsUdvxEw/VuFWRX6LCfI/AAAAAAAAC28/hRYufPy1xeE/s400/Bank%2BData%2BCentre.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">ACCOUNT LEDGER BOOK OF 17th CENTURY BANKER EDWARD BACKWELL</td></tr></tbody></table><br /></div><div style="text-align: justify;">Fast-forward to 2016 and we’ve entered into a world no longer dominated by tools, but by <i>machines</i>. The crucial difference between a tool and a machine is that the former relies on human energy, while and the latter relies on non-human energy channelled via a system that replicates - and accentuates - the action of a human using a tool. The carpenter is now a furniture corporation using computer-programmed CNC cutters. Likewise, the bank that keeps score of that company’s money runs humming datacentres with vast account databases. These are digital equivalents of the old ledger books, drawing upon fossil-fuel generated electricity to write and hold information as magnetised atoms on hard-drives.<br /><br /><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://3.bp.blogspot.com/-XN4tl5kBXZ8/VuFXRlXMMtI/AAAAAAAAC3E/eJd8EiZARBM/s1600/Bank%2BLedger.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="270" src="https://3.bp.blogspot.com/-XN4tl5kBXZ8/VuFXRlXMMtI/AAAAAAAAC3E/eJd8EiZARBM/s400/Bank%2BLedger.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">THE 21st CENTURY BANKER'S LEDGER BOOK</td></tr></tbody></table></div><br /><div style="text-align: justify;">We call the process of moving from manual tools to machines <i>automation</i>, and it appears in various forms within everyday financial life. The ATM, for instance, is an automated version of the bank teller of old who would have to exert energy to check your account, hand you cash, and alter your accounts. I use an <i>interface</i> to interact with this ATM, which gives me some form of control, but only within the inflexible rules of whatever it will allow me to do. This actually requires energy on my part, so while the machine seems to ‘do things for me’, the process also seems to be ‘self-service’.</div><br /><div style="text-align: justify;">Automation is creeping into more and more of personal finance. The glossy adverts of the financial marketing industry put an appealing spin on the future world of contactless payment, branchless banking and cashless society. They focus the mind on problems that are apparently being solved through new technology, but they simultaneously divert attention from the dark side of the automated financial regimes that are emerging around us. To get to grips with these processes of automation - and the sub-field of 'digitisation' - we first need to establish some definitions of machines, robots, and algorithms.</div><br /><h3 style="text-align: left;">Financial machines vs. financial robots</h3><div class="separator" style="clear: both; text-align: center;"></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://1.bp.blogspot.com/-igeAszB9p1c/VuFfMnip6gI/AAAAAAAAC3U/12T5qggTztQ/s1600/Financial%2BRobot.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="312" src="https://1.bp.blogspot.com/-igeAszB9p1c/VuFfMnip6gI/AAAAAAAAC3U/12T5qggTztQ/s400/Financial%2BRobot.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">I COME IN PEACE TO HELP YOU</td></tr></tbody></table><div style="text-align: justify;">Machines tend to require us to manually activate them towards a singular repeated action that they do no matter what, like the way a kettle always boils water if I manually push the ‘on’ button. The ATM is a <i>multi-function</i> machine that can do different things if I push different buttons on the interface, like ‘give me £30’ or ‘show me my balance’. It doesn’t, however, seem to ‘make decisions’ or have any ability to autonomously react. To make it feel like a <i>robot</i>, it must show some nominal agency to make decisions based on external information.</div><br /><div style="text-align: justify;">To understand what a financial robot looks like, we need to sketch some general characteristics of robots more generally. We might think of a traditional robot as a system comprised of four parts:</div><ol style="text-align: left;"><li>Body: An assemblage of mechanical parts</li><li>Mind: An algorithmic ‘mind’ that can compute or analyse information</li><li>Senses: Sensors that can detect external data</li><li>Energy source: For example, electricity</li></ol><div style="text-align: justify;">The traditional robot might take in data from sensors and compute it through an algorithmic mind that can activate the mechanical body, provided there is electricity.&nbsp;<span style="text-align: justify;">For example, a robot could be a <a href="http://www.irobot.com/For-the-Home/Vacuum-Cleaning/Roomba.aspx">vacuum cleaner</a> (mechanical body) that receives data from photocell sensors (senses) to be processed through an algorithm (mind) to calculate its position, which in turn sends orders for the body to move around the room, thereby 'autonomously' vacuuming your lounge by 'making decisions'. &nbsp;</span></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Importantly, though, it may not be necessary to include the mechanical ‘body’ part at all. A robot might simply be a software-based algorithmic ‘mind’, taking in data and sending orders to other entities to act out its ‘will’. We might call this an <i>algo-robot</i>.</div><br /><div style="text-align: justify;">Let’s consider an Excel spreadsheet model that is used to estimate the fair price of a financial instrument like a share. A person armed with a pen and pad might take hours or even days to go through the relevant data and do the calculation manually. The spreadsheet model on the other hand, directs the electricity coursing through the hardware of a computer to do the same calculation in a fraction of the time. This is a <i>financial machine</i>, automating manual human calculation processes.</div><br /><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="https://4.bp.blogspot.com/-qPR0JIOT5n8/VuFgJy5R2aI/AAAAAAAAC3c/wcrAYGwYlp8/s1600/Financial%2Bmachine.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="362" src="https://4.bp.blogspot.com/-qPR0JIOT5n8/VuFgJy5R2aI/AAAAAAAAC3c/wcrAYGwYlp8/s400/Financial%2Bmachine.jpg" width="500" /></a></div><br /><div style="text-align: justify;">To make this into a robotic system, though, we must allow it to receive perceivable external data – such as a price feed from the London Stock Exchange – and allow it to process the data through its ‘mind’ of algorithmic formulas, and then give it the ability to make executive decisions based on its calculations (like the ability to send buy or sell orders back to the stock-market). And, <i>voila</i>, this is precisely what <a href="http://suitpossum.blogspot.com/2015/06/high-frequency-trading-guide.html">algorithmic automated trading</a> is. The spreadsheet model has turned into a trader <i>algo-robot</i>. From this point the algorithmic coding can be developed into more ‘human’ forms, for example by equipping the robot with machine learning capacities and ‘evolutionary algorithms’ that can adapt to changing circumstances.</div><br /><h3 style="text-align: left;">The algo-robotic managers of digital finance</h3><div><br /></div><div class="separator" style="clear: both; text-align: center;"></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://3.bp.blogspot.com/-oHbxdFTxHLM/VtNBwrZC83I/AAAAAAAACxM/1IkVMSAQXEk/s1600/Robot%2Bworker.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="400" src="https://3.bp.blogspot.com/-oHbxdFTxHLM/VtNBwrZC83I/AAAAAAAACxM/1IkVMSAQXEk/s400/Robot%2Bworker.jpg" width="250" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><b>ROBOTS: NO LONGER WORKERS and NO LONGER BODIES</b></td></tr></tbody></table><div style="text-align: justify;">‘Algo-robotic’ systems are particularly adept at accumulating power. Unlike the simple machine that offers static options via an interface, an algo-robot - or a series of linked algo-robots - have a greater ability to<i> react in multiple ways in response to multiple data streams</i>, and therefore to organise and co-ordinate. This trait makes senior corporate management warm to them, because, after all, reacting and co-ordinating are core elements of what a manager does.</div><br /><div style="text-align: justify;">The old hierarchy within a corporation was one where owners used managers to co-ordinate workers and machines. This gave rise to the traditional battles between owners and managers, managers and workers, and workers and machines. The emergent hierarchy is subtly different. The owners – often a disparate collection of distant shareholders – grant power to high-level management, who increasingly use algorithmic systems as ‘middle management’ to organise their workers and more basic machines.</div><br /><div style="text-align: justify;">And this is where we see the changing conception of the robotic system’s ‘body’. Rather than being a mechanical assemblage with an algorithmic ‘mind’, the robot could be an algorithmic mind co-ordinating a ‘body’ constituted out of ordinary employees, who increasingly act like machine parts. Think about the Amazon deliveryman driving the van to act out an order sent to him by an algorithm. This ‘body’ doesn’t even have to be constituted by the company’s own employees, as in the case of self-employed Uber drivers co-ordinated by the Uber algorithms.</div><br /><div style="text-align: justify;">These arrangements are often difficult to perceive, but algo-robotic systems have been embedding themselves into everyday forms of finance for decades, not necessarily 'taking over control' but often creating a hybrid structure in which manual human actions interact with automated machine-robot actions. For example, the investment bank trader might negotiate a derivatives deal over the phone and then book it into a partly automated back-office system.</div><br /><div style="text-align: justify;"><table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody><tr><td style="text-align: center;"><a href="https://3.bp.blogspot.com/-5mPaSsFXKdk/VtcWx34EN4I/AAAAAAAACz0/aETP6YN_gzg/s1600/Human%2BInterface.jpg" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="257" src="https://3.bp.blogspot.com/-5mPaSsFXKdk/VtcWx34EN4I/AAAAAAAACz0/aETP6YN_gzg/s400/Human%2BInterface.jpg" width="400" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">"GOOD MORNING, HOW CAN MY MACHINE HELP YOU?"</td></tr></tbody></table>The quintessential example, however, is the retail bank branch. You can talk with employees behind the Barclays counters, but often they are just there to enter data into a centralised system that tells them how to deal with you. To some degree these employees have <i>agency</i> – the ability to make quasi-autonomous decisions – but the dominant trend is for them to become subservient to the machinic system they work with, unable to operate outside the bounds set by their computer. Indeed, many bank employees cannot explain why the computers have made the decisions they have, and thus they appear as the human face put there to break the news of whatever the algorithm has decided. We might even say they are a<i> human interface</i> to an otherwise algo-robotic system that is accountable only to the senior corporate management, who you will never deal with.</div><br /><hr /><div style="text-align: center;"><i>NOTE: If you have enjoyed this so far, you might like&nbsp;<a href="http://suitpossum.blogspot.co.uk/p/the-heretics-guide.html">my book</a></i></div><hr /><div><br /></div><div><h3 style="text-align: left;">From hybrid systems to self-service digital purity</h3><div><br /></div><div style="text-align: justify;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://2.bp.blogspot.com/-uSr0kxfcs_8/VtOH2p9x4AI/AAAAAAAACzQ/Q69z5MpXlY8/s1600/Cyborg.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="333" src="https://2.bp.blogspot.com/-uSr0kxfcs_8/VtOH2p9x4AI/AAAAAAAACzQ/Q69z5MpXlY8/s400/Cyborg.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">CHARLIE WAS LAID OFF FOR BEING TOO HUMAN</td></tr></tbody></table>But, 'human interfaces' like that are actually quite <i>costly</i> to maintain. People are alive, and thus need food, sick leave, maternity leave and education. They also have a troublesome awareness of exploitation and an unpredictable ability to disobey, defraud, make mistakes or go rogue. Thus, over the years corporate managers have tried to push the power balance in this hybrid model towards the machine side. In their ideal world, bank executives would get rid of as many manual human elements as possible and replace them with software systems moving binary code around on hard drives, a process they refer to as 'digitisation'. Corporate management is fond of digitisation – and other forms of automation – because it is a force for scale, standardisation and efficiency – and in turn lowers costs, leading to enhanced profits.&nbsp;</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The process is perhaps most advanced in the realm of electronic payments, where money is shifted with very little human action at all. Despite recent talk of the rise of digital currencies, most money in advanced economies is digital already, and tapping your contactless payment card sets in motion an elaborate automated system of hard-drive editing that 'moves' your money from one bank data-centre to another. This technology underpins talk of a future 'cashless society'. Bouncy startups like <a href="https://venmo.com/">Venmo</a> and <a href="https://www.izettle.com/">iZettle</a>&nbsp;have got into the payments game, adding friendly new layers to an underlying digital payments infrastructure that is nonetheless still dominated by the banking industry and credit card networks.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://3.bp.blogspot.com/-B6_BnBO88bI/VtMrqmmteAI/AAAAAAAACv0/ROUBKs4BDGs/s1600/Bank%2Bbranch.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto; text-align: center;"><img border="0" height="310" src="https://3.bp.blogspot.com/-B6_BnBO88bI/VtMrqmmteAI/AAAAAAAACv0/ROUBKs4BDGs/s400/Bank%2Bbranch.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">HORRIFIC DARK AGE INEFFICIENCY</td></tr></tbody></table>In the case of retail banking, an ideal situation for banks might be to get rid of the branches altogether, and to push for a world of ‘branchless digital banking’. This generally means slowly dismantling, delegitimising and denaturalising branches in the public imagination, while simultaneously getting people accustomed to 'self-service'. Indeed, many banks are cutting branches, and many new forms of financial services are found only online, like digital banks <a href="https://www.fidorbank.uk/">Fidor</a> and <a href="https://www.atombank.co.uk/">Atom</a>. Digital banking startup <a href="https://www.kreditech.com/">Kreditech</a> claims that bank branches won't exist 10 years hence, "and neither will cost-intensive, manual banking processes". "We believe algorithms and automated processes are the way to customer-friendly banking," the startup declares confidently.&nbsp;</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Such digital banking is but one strand in the digital trajectory. Digitisation is starting to be applied to more specialist areas of finance, too, such as wealth management. <a href="https://www.wealthfront.com/">Wealthfront</a>, for example, now offers automated investment advice for wealthy individuals. In their investment <a href="https://research.wealthfront.com/whitepapers/investment-methodology/">white paper</a> they state that sophisticated algorithms can "do a better job of evaluating risk than the average traditional advisor".</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Digital systems like Wealthfront are often promoted as cutting out the middleman – assumed to be human, slow, incompetent and corrupt – and therefore as cutting costs in both money and time. Some startups use this to build a narrative of the 'democratisation of finance'. <a href="https://www.quantopian.com/">Quantopian</a>, a system for building your own trading algorithms, comes with the tagline: "Levelling Wall Street's playing field". <a href="https://www.robinhood.com/">Robinhood</a> draws on the name of the folk hero to pitch their low-fee mobile stock-trading system.&nbsp;</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">It seems uncontroversial that these systems may individually lower costs to users in a short-term sense. Nevertheless, while startup culture is fixated upon using digital technology to narrowly improve short-term efficiency in many different business settings, it is woefully inept at analysing what problems this process may accumulate in the long term. Payments startups, for example, see themselves as incrementally working towards a 'cashless society', a futurist buzzword laden with positive connotations of hypermodern efficiency. It describes the downfall of something 'old' and archaic – cash – but doesn't actually describe what rises up in its place. If you like, 'cashless society' could be reframed as 'a society in which every transaction you make will have to be approved by a private intermediary who can watch your actions and exclude you.' It doesn’t roll off the tongue very well, and alarms the critical impulses, but nevertheless, that’s what <a href="http://www.theguardian.com/sustainable-business/2015/sep/30/1984-does-a-cashless-economy-make-for-a-surveillance-state">cashless society would bring</a>.<br /><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><br /></div></div></div><div><h3 style="text-align: left;">Forcing the 'inevitable progress' of digital finance</h3><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://2.bp.blogspot.com/-CsXYjY944bQ/VtN6AJcnrCI/AAAAAAAACx0/hJW0YZD6btA/s1600/Progress.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="177" src="https://2.bp.blogspot.com/-CsXYjY944bQ/VtN6AJcnrCI/AAAAAAAACx0/hJW0YZD6btA/s400/Progress.png" width="400" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">WHEN DOES 'PROGRESS' FINISH?</td></tr></tbody></table><div style="text-align: justify;">Part of the reason for the pervasive acceptance of these developments is the deeper ideological narrative underpinning them, one which is found within the tech industry more generally. It is the idea, firstly, that the automation of everything is inevitable; and that, secondly, this is 'progress': a step up from the inefficient, dirty services we have now. In this context, questioning the broader problems that might emerge from narrowly useful automation processes is ridiculed as Luddite, anti-progress or futile.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Of course, ‘progress’ is a contested term. If you’re cynical, you may see it as shorthand for ‘the situation an organised set of commercial interests view as desirable in the short-term’. It doesn’t necessarily mean ‘the thing that would be good for the broader public in the long term’.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Indeed, it is apparent that many people don't respond to 'progress' in the way they're supposed to. We still find people insisting on queueing to use the human cashiers at big supermarkets like Tesco, rather than diligently queueing up for the automated checkout. Likewise, we still find people stubbornly visiting the bank branches, making manual payment requests; even sending cheques.</div><br /><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="https://3.bp.blogspot.com/-23CZgFlRRqI/VtOEU-YhmjI/AAAAAAAACy8/I7EjbZZht-I/s1600/self%2Bcheckout.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="235" src="https://3.bp.blogspot.com/-23CZgFlRRqI/VtOEU-YhmjI/AAAAAAAACy8/I7EjbZZht-I/s400/self%2Bcheckout.jpg" width="400" /></a><a href="https://4.bp.blogspot.com/-zuA3CbbPmL0/VtOFR8wYERI/AAAAAAAACzE/SpXEhWHtzxU/s1600/RATM.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="76" src="https://4.bp.blogspot.com/-zuA3CbbPmL0/VtOFR8wYERI/AAAAAAAACzE/SpXEhWHtzxU/s400/RATM.gif" width="400" /></a></div><br /><div style="text-align: justify;">Perhaps this is because there is something deeply deadening about interacting as a warm-blooded individual with a soulless automaton trying to sound like a human. The hollow fakeness of the cold clinical checkout voice makes you feel more alone than anything else, patronised by a machine clearly put there to cut costs as part of a faceless corporate revenue circuit.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The ongoing challenge for corporate management, therefore, is how to push automation while keeping it palatable. One key technique is to try to build more 'human-like' interfaces, and thus in London we find a hotbed of <a href="https://uxmag.com/articles/why-banks-need-to-revamp-their-user-experience">user-experience (UX) design</a> firms. They are natural partners to the digitisation process, combining everything from ethnographic research to behavioural psychology to try to create banking interfaces that seem warm and inviting.</div><br /><div class="separator" style="clear: both; text-align: center;"></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://3.bp.blogspot.com/-joBQq6NyDbg/VuFhmtmky4I/AAAAAAAAC3o/Pi1VMqxtqsY/s1600/Apple%2BPay.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="235" src="https://3.bp.blogspot.com/-joBQq6NyDbg/VuFhmtmky4I/AAAAAAAAC3o/Pi1VMqxtqsY/s400/Apple%2BPay.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">JESSICA SPENDS A SMALL FRACTION OF HER CORPORATE ENDORSEMENT EARNINGS ON COFFEE</td></tr></tbody></table><br /><div style="text-align: justify;">Another key technique is marketing, because people often have to be 'taught' that they want something. In the case of contactless payment on the London Underground, the Mayor of London, Barclaycard, Visa and the Evening Standard have formed an unholy alliance to promote <a href="https://www.pennyforlondon.com/">Penny for London</a>, a thinly veiled front-group to encourage people to use the Barclaycard-run contactless payments system rather than those ancient Oyster cards. Sports stars like <a href="http://trevorrayhart.co.uk/wp-content/uploads/2015/10/99WCR15145_ApplePay_48Cropweb-900x425.jpg">Jessica Ennis-Hill</a> and <a href="http://www.biggroup.co.uk/~/media/images/case-studies/mastercard%20merchant%20partnerships/merchant-partnerships-body-d-500x500.ashx">Dan Carter</a> have been co-opted into becoming the champions of automated finance. Signs have been popping up proclaiming 'contactless is here', as if it were something that people were supposed to be waiting for. These subtle hegemonic messages permeate every financial billboard in the city.</div><br /><br /><h3 style="text-align: left;">The dark side of digital finance</h3><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://3.bp.blogspot.com/-m-jebQ9T56w/VuFia8jnOGI/AAAAAAAAC3w/kw1V0xqlVe8/s1600/Contactless%2BSurveillance.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="232" src="https://3.bp.blogspot.com/-m-jebQ9T56w/VuFia8jnOGI/AAAAAAAAC3w/kw1V0xqlVe8/s400/Contactless%2BSurveillance.png" width="500" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"></div></div><div><br /><div style="text-align: justify;">One key to developing a critical consciousness about technology is to realise that for each new innovation a new trade-off is simultaneously created. Think about the wonderful world of digital banking. A low-level bank branch manager might be subservient to the centralised system they work for, but can also deviate subtly from its rules; and can experience empathy that might override strict economic 'rationality'. Imagine you replace such an individual with an online query form. Its dropdown menu is the digital equivalent of George Orwell's <a href="https://en.wikipedia.org/wiki/Newspeak">Newspeak</a>, forcing your nuanced, specific requests into blunt, standardised and limited options. If your problem is D, a system that only offers you solutions to A, B, or C is fundamentally callous. A carefully constructed user complaints system can build an illusion of accountability, while being coded firmly to bias the interests of the company, not the user.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Indeed, if you ever watch people around automated self-service systems, they often adopt a stance of submissive rule-abiding. The system might appear to be 'helpful', and yet it clearly only allows behaviour that agrees to its own terms. If you fail to interact exactly correctly, you will not make it through the digital gatekeeper, which – unlike the human gatekeeper – has no ability or desire to empathise or make a plan. It just says 'ERROR'.</div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://1.bp.blogspot.com/-YxFVrUzlx-o/VtODGSh8lkI/AAAAAAAACy0/rcX-1dEHafg/s1600/SelfService%2BCheckout%2B2.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="356" src="https://1.bp.blogspot.com/-YxFVrUzlx-o/VtODGSh8lkI/AAAAAAAACy0/rcX-1dEHafg/s400/SelfService%2BCheckout%2B2.jpg" width="500" /></a></div><br /><br /><div style="text-align: justify;">This turns out to be the perfect accountability and cost cushion for senior corporate management. The responsibility and energy required for dealing with problems gets outsourced to the users themselves. And lost revenue from unhappy customers is more than compensated by cost savings from automation. This is the world of <a href="http://www.theguardian.com/technology/2014/jul/20/rise-of-data-death-of-politics-evgeny-morozov-algorithmic-regulation">algorithmic regulation</a>, the subtle unaccountable violence of systems that feel no solidarity with the people who have to use it, the foundation for the perfect scaled bureaucracy.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">So, in some future world of purely digital banking we find the seeds of a worrying lack of accountability and an enormous amount of user alienation. The loan you applied for online gets rejected, but nobody is there to explain what hidden calculations were done to reach that decision. To the bank management, you are nothing more than an abstract entity represented by machine-readable binary code.</div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://3.bp.blogspot.com/-pVvdeJ6O2WE/VtOAmat3lzI/AAAAAAAACyc/WSXPA-2ldXw/s1600/Binary%2Bcode%2B2.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="334" src="https://3.bp.blogspot.com/-pVvdeJ6O2WE/VtOAmat3lzI/AAAAAAAACyc/WSXPA-2ldXw/s400/Binary%2Bcode%2B2.jpg" width="400" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">THAT'S YOU, AS MAGNETIC ATOMS</td></tr></tbody></table><br /><h3 style="text-align: left;">So where is the financial AI?</h3><div><br /></div><div style="text-align: justify;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://3.bp.blogspot.com/-24TL0TXxw2w/VtcbQvJ5ArI/AAAAAAAAC0A/RjWyklYWWjI/s1600/Narcissus%2BAI.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="306" src="https://3.bp.blogspot.com/-24TL0TXxw2w/VtcbQvJ5ArI/AAAAAAAAC0A/RjWyklYWWjI/s400/Narcissus%2BAI.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">NARCISSUS TRIES HSBC's PLATFORM: "THEY UNDERSTAND ME SO WELL"</td></tr></tbody></table><br />Of course, the banks don't want you to <i>feel</i> like that. In the absence of employees, they will have to use your data to create the illusion of some type of personally tailored service. Your historical interactions with the system will be sold back to you as a ghostly caricature of yourself, fed through the user-experience filters. And it is here that we find the emergence of new forms of <i>financial artificial intelligence</i>.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Let’s return to the earlier – somewhat blurry – distinction between machines and robots: robots are essentially machines that take in data from sensors and process it through an algorithmic 'mind' in order to react or 'make decisions'. Likewise, there is a blurry line between robots and artificial intelligence. At its most unambitious, AI is just a term for any form of calculation done by robots. It really comes into its own, however, when referring to robots that have adaptation and learning capabilities which allow them to show creativity and unexpected behaviour. Rather than merely responding to your actions or to external stimuli, the system begins to predict things, offer things, make suggestions, and do things without explicitly being asked to do them.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Imagine, for example, an ATM booth that uses facial recognition technology to identify you as you approach and make suggestions to you. Notice how the power dynamic changes? With a normal ATM I am still an active body, choosing to trigger the machine via the interface. In this new scenario, though, I’m a passive body who triggers the machine without any explicit conscious action on my part. It seems to 'take the initiative' and to direct me. It's only when we start to feel this as a power dynamic that we start to get closer to the feel of AI. The more you move towards AI, the more you feel increasingly <i>passive</i> relative to the robot (a passivity that is beautifully captured in <a href="http://www.theguardian.com/sustainable-business/video/2016/feb/17/last-job-on-earth-automation-robots-unemployment-animation-video?CMP=embed_video">this video</a>).</div><br /><br /><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://4.bp.blogspot.com/-UIrMqbYkxbM/VtOLPru7m5I/AAAAAAAACzc/wLCsiMY_DSE/s1600/Financial%2BAutosuggestion.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="213" src="https://4.bp.blogspot.com/-UIrMqbYkxbM/VtOLPru7m5I/AAAAAAAACzc/wLCsiMY_DSE/s400/Financial%2BAutosuggestion.png" width="400" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">CAN YOU PLEASE LET ME FINISH BEFORE INTERRUPTING?</td></tr></tbody></table><div style="text-align: justify;">Consider the customised ads Google feeds to us. We don't actively <i>try</i> to make them appear, yet it's still our actions that trigger the system to target us with specific information. <i>That’s</i> more like AI. There are many scenarios where this process could creep into finance, from machine-learning trading algorithms to creepy health insurance contracts that shift their prices according to your mobile payment data. "I see you paid for two chocolates today Brett. I will raise your premium."</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://2.bp.blogspot.com/-cOB215O4plc/VtcflNSkkZI/AAAAAAAAC0M/9DT1HZqX-BI/s1600/GhostInMachine.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="343" src="https://2.bp.blogspot.com/-cOB215O4plc/VtcflNSkkZI/AAAAAAAAC0M/9DT1HZqX-BI/s400/GhostInMachine.png" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">WANNA PLAY?</td></tr></tbody></table>But this can go beyond a single machine. Just like a robotic system may actually be constituted by an algorithmic 'mind' that coordinates a 'body' of people – like Uber drivers acting out the will of their invisible algo-boss – so the body of an AI may be fragmented, decentralised and hard to perceive. It could be a network of interacting algo-robotic systems that direct the actions of people who are unaware they are triggering the system. No individual node may be in control, but people may collectively become locked into reliance upon the system, pulled around by forces not immediately apparent to them, being manipulated by their own data. The AI could be a ghost in the collective machine, the manipulative 'invisible hand' in a technologically mediated market.<br /><br /><br /></div></div><div><h3 style="text-align: left;">Don't panic, but don't not panic either</h3><div><div style="text-align: justify;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://2.bp.blogspot.com/-0SUnJuLYiLk/VtchOeaJrCI/AAAAAAAAC0g/W0qalgQksis/s1600/DigitalFinance.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="320" src="https://2.bp.blogspot.com/-0SUnJuLYiLk/VtchOeaJrCI/AAAAAAAAC0g/W0qalgQksis/s400/DigitalFinance.jpg" width="400" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><span style="font-size: 12.8px;">"DON'T WORRY, YOU CAN STILL PLAY FRISBEE IN THE MATRIX"</span></td></tr></tbody></table>When thinking about the future of digital finance, the issue is not necessarily whether these services are narrowly useful to an individual. Sure, maybe the contactless card is cool if I'm in a hurry and maybe I can get a decent deal from the AI insurance contract. Rather, the issue is whether they collectively imprison people in digital infrastructures that increasingly undermine personal agency and replace it with coded, inflexible bureaucracy; or whether they truly offer forms of 'democratisation'.</div></div><div><div style="text-align: justify;"><br /></div></div><div><div style="text-align: justify;">It is easy to overhype these scenarios, though, because while it is true that payments, trading and retail banking are increasingly subject to automation, finance as a whole may not be especially amenable to it. Large loan financing decisions, complex multistage project-financing deals, exotic derivatives and other illiquid financial products cannot easily be standardised. They require teams of lawyers and dealmakers hashing out terms, conditions, and contingencies. Finance is an ancient politicised art of using contracts about the future to mobilise current action, and the dealmakers cannot easily be replaced with algos.</div></div><div><div style="text-align: justify;"><br /></div></div><div><div style="text-align: justify;">Furthermore, attempts to create more advanced and intuitive automated systems frequently fail. Semantic analysis algorithms – designed to read text – are terrible at understanding irony, sarcasm and contextual ambiguity within language. They may create feedbacks that thwart their own purposes, as in when people learn to game a credit-rating algorithm. <a href="http://suitpossum.blogspot.co.uk/2015/06/high-frequency-trading-guide.html">High frequency trading</a> falls apart under its own excesses and becomes less profitable. And there are customer backlashes: <a href="https://www.metrobankonline.co.uk/">Metro Bank</a>, the first new high-street bank in Britain for 150 years when it launched in 2010, has grown precisely because of its explicit focus on human-centred branch banking.</div></div><div><br /></div><div><div style="text-align: justify;">Nevertheless, it would be unwise to ignore the fact that the corporate trajectory is very much towards trying to automate as much as possible, and people need to come to terms with both the implications of this, and the vested interests behind it. It is not a neutral, 'inevitable' process. There are particular parties who seek it out. Take a moment to investigate who is on <a href="https://beta.companieshouse.gov.uk/company/08684244/officers">the board</a> of Penny for London, that altruistic charity that insists contactless payment is a great way to help those in need. It includes hedge fund mogul&nbsp;<a href="https://en.wikipedia.org/wiki/Stanley_Fink,_Baron_Fink">Stanley Fink</a>, and previously included the ex-CEO of Barclays, Bob Diamond.</div></div><div><div style="text-align: justify;"><br /></div></div><div><div style="text-align: justify;">So how should one respond? One approach is to ride with the technology, rather than to resist it. In intellectual leftwing circles the <a href="https://en.wikipedia.org/wiki/Accelerationism">accelerationist</a> sect advocates an embrace of automation, standing against sentimental calls for more human, local systems. It's an abstract position, founded on beliefs that automation will create conditions ideal for the downfall of capitalism. At some point it intersects with the <a href="https://en.wikipedia.org/wiki/Technological_singularity">cult of the Singularity</a>, popular among evangelical tech entrepreneurs and transhumanists.<br /><br /><div class="separator" style="clear: both; text-align: center;"></div></div></div><div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://4.bp.blogspot.com/-0I20c8B8xHI/VuFlSKxL4RI/AAAAAAAAC38/qlXKgLRLmKw/s1600/Accelerationism%2B4.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="332" src="https://4.bp.blogspot.com/-0I20c8B8xHI/VuFlSKxL4RI/AAAAAAAAC38/qlXKgLRLmKw/s400/Accelerationism%2B4.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">ARE WE THERE YET? ACCELERATE!</td></tr></tbody></table></div></div><div><div style="text-align: justify;"><br />The ideological ambiguity is perhaps most acute in the emergent field of <a href="http://www.unrisd.org/brett-scott">blockchain technology</a>. Such systems potentially offer a way for strangers to freely interact with each other without central human intermediaries getting involved in the process. They may use blockchain systems to issue shares, enter into insurance contracts and form digital co-operatives, but the systems are underpinned by an extreme version of automation, one that is essentially autonomous. Indeed, the deep-level mission of projects such as <a href="http://ethereum.org/">Ethereum</a>, a decentralised platform for 'trustless' transactions, is the replacement of human systems of institutional trust – like the legal and political systems that normally underpin all contracts and markets – with automated ones apparently detached from the human ambitions of those who historically have run such systems ('the politicians', 'the regulators', 'the bankers'). Libertarians long for an automated '<a href="http://www.e-ir.info/2014/06/01/visions-of-a-techno-leviathan-the-politics-of-the-bitcoin-blockchain/">Techno-Leviathan</a>' to replace the human sovereigns we have now, but it is a big question as to whether such automated systems truly provide a more 'democratic' infrastructure for interaction.</div></div><div><br /></div><div><div style="text-align: justify;">More down-to-earth are those who want to allow more creative interaction with the existing digital infrastructure. Take the <a href="https://openbankproject.com/">Open Bank Project</a>, for example, which wants to facilitate third-party customisation of digitised banking processes by opening up bank <a href="https://en.wikipedia.org/wiki/Application_programming_interface">APIs</a>, in the same way that independent developers might build third-party Twitter apps that draw data from Twitter's API.</div></div><div><div style="text-align: justify;"><br /></div></div><div><div style="text-align: justify;">And, finally, we have those who authentically seek to harness digital technology to bypass and challenge the standard economic rationality of large scale, short-term profit-seeking financial beasts, taking advantage of the lower startup costs of a digital setting to promote peer-to-peer finance, alternative currencies, crowdfunding platforms and non-monetary sharing platforms.</div></div><div><div style="text-align: justify;"><br /></div></div><div><div style="text-align: justify;">So, the scene is set. One thing is for sure: if the future of banking is going to be digital, we want it to be populated with those who value the deeper tenets of <a href="http://suitpossum.blogspot.co.uk/2013/11/building-creative-commons-five-pillars.html">open source philosophy</a>. Otherwise we could be left with increasingly alienating, exclusive and unaccountable financial surveillance states, presiding over increasingly passive and patronised users.<br /><div class="separator" style="clear: both; text-align: center;"></div><br /><div class="separator" style="clear: both; text-align: center;"></div><br /></div></div></div><div><div class="separator" style="clear: both; text-align: center;"><a href="https://3.bp.blogspot.com/-8Eq78gQkjmI/VtdhXnMQJLI/AAAAAAAAC1Y/_-02cqQG9hE/s1600/Surveillance%2BMonitor.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="400" src="https://3.bp.blogspot.com/-8Eq78gQkjmI/VtdhXnMQJLI/AAAAAAAAC1Y/_-02cqQG9hE/s400/Surveillance%2BMonitor.png" width="315" /></a></div></div><br /><hr /><div style="text-align: center;"><i>If you'd like to support my ongoing Creative Commons writing, please consider buying me a <a href="http://suitpossum.blogspot.co.uk/p/support.html">virtual beer</a></i></div><hr /><div><br /></div></div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/12_T13fntlg" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com8http://suitpossum.blogspot.com/2016/03/digital-banking-dark-side.htmltag:blogger.com,1999:blog-6454624189383327908.post-78071558780721409992016-03-10T09:08:00.000+00:002016-03-10T09:08:04.042+00:00Money is not a store of value. It is a claim upon value<div dir="ltr" style="text-align: left;" trbidi="on"><div class="separator" style="clear: both; text-align: center;"><a href="https://2.bp.blogspot.com/-C8LoQm2yd8o/VuA6g9Hqf_I/AAAAAAAAC1s/ZBQZ9ZoZQZ8/s1600/SmokingMoney1.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="281" src="https://2.bp.blogspot.com/-C8LoQm2yd8o/VuA6g9Hqf_I/AAAAAAAAC1s/ZBQZ9ZoZQZ8/s400/SmokingMoney1.jpg" width="500" /></a></div><br /><hr /><i>Note: This was originally published as a response to the Aeon Conversations piece '<a href="https://aeon.co/conversations/what-is-money">What is Money</a>'</i><br /><hr /><br /><div style="text-align: justify;"><i>Money is not a store of value. It is a claim upon value.</i> This might sound like pedantic semantics, but it is crucially important, especially if you’re trying to alter how it works.</div><div style="text-align: justify;"><br /></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="https://2.bp.blogspot.com/-b55sJuojaNg/VuA-c2LVcDI/AAAAAAAAC18/G5qnWOgyOoU/s1600/CocaCola%2Bbottle.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="320" src="https://2.bp.blogspot.com/-b55sJuojaNg/VuA-c2LVcDI/AAAAAAAAC18/G5qnWOgyOoU/s320/CocaCola%2Bbottle.jpg" width="155" /></a></div><div style="text-align: justify;">Imagine a Coca Cola bottle with Coke in it. That bottle is a store of value. If I open it and drink the Coke, it will kickstart energy processes in my body and help me to carry on surviving. Now imagine a piece of paper next to the bottle that says ‘whoever holds this is entitled to claim this bottle of Coke’. That’s a claim upon value. If a group of people come to believe in the validity of that claim, the note can be passed around as a means to metaphorically ‘transfer’ Coke value, or - more accurately - to transfer&nbsp;access to Coke value. That’s then a form of money.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The fundamental difference between the note and the Coke can be tested by a simple experiment. Burning them. Imagine I drop the Coke into a furnace and it evaporates away. Nobody can ever drink it now, and we have destroyed value. The note is simultaneously rendered meaningless. It’s just a piece of paper saying you can claim a non-existent thing.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Now imagine that instead of incinerating the Coke, I burn the note instead. The Coke remains, and no value is destroyed. All that has happened it that I’ve destroyed my claim to that value.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Let’s scale this vision up now. Imagine a nation of people with energy, intellect and resources to make things. This is real productive capacity, and it a source of real value in the form of real goods and services. Now imagine a piece of paper that says ‘whoever holds this is entitled to claim goods and services from the people of this nation’. That’s a claim upon value. Now imagine that 60 million people believe in that claim. A network like that is so powerful that it’s in nobody’s interest to not believe in the claim.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">That’s pretty much like the British Pound, for example.<br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://4.bp.blogspot.com/-wFT-EYuJQos/VuE4ONL0OpI/AAAAAAAAC2c/yniT6XFe7L4/s1600/Five%2BPound%2BNote.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="266" src="https://4.bp.blogspot.com/-wFT-EYuJQos/VuE4ONL0OpI/AAAAAAAAC2c/yniT6XFe7L4/s400/Five%2BPound%2BNote.JPG" width="400" /></a></div><br /></div><div style="text-align: justify;">And if I take my £10 note and burn it, what happens? I’ve destroyed no value. All I’ve done is destroyed some of my personal claim upon the good and services created within the UK.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">That’s an act of sacrifice, because the curious thing that occurs as a result of this is that all the remaining claims become worth slightly more. We call that deflation. So, when the Joker in the 2008 Batman film The Dark Knight <a href="https://www.youtube.com/watch?v=EDAA5o6xMc4">burns millions of dollar bills</a>, he’s giving up his claim to the underlying value they represent, and transferring it to others.<br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://2.bp.blogspot.com/-e96OiUT8HYk/VuBATIPC8OI/AAAAAAAAC2M/8Ysn09gVf78/s1600/MoneyBurn.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="320" src="https://2.bp.blogspot.com/-e96OiUT8HYk/VuBATIPC8OI/AAAAAAAAC2M/8Ysn09gVf78/s320/MoneyBurn.jpg" width="236" /></a></div><br />Of course, it’s a bit more complex than that, because that act of altering the number of claims in the system can induce all manner of economic activity. This is what we sometimes call ‘monetary policy’. Creating new money claims via credit systems is one means of activating and steering real economic activity producing real value.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">And the key players in that are not just central banks, but the entire commercial banking sector. Because really, it’s not like most money claims take the form of physical notes any more. Most are data entries, binary code imprints on hard drives of computers within data centres controlled by commercial banks. The act of creating and moving monetary claims around in such a system is the act of editing databases.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">And this poses interesting possibilities for designing alternative forms of money. Change the nature of the database, the rules concerning who gets to create claims, and the rules concerning what a valid claim looks like, and you can alter real economic activity in interesting ways.<br /><br /><div style="text-align: justify;"><br /></div><hr style="text-align: left;" /><h3 style="text-align: left;">If you enjoyed this piece...</h3><div style="text-align: left;"><span style="text-align: justify;">If you'd like to support my ongoing writing please consider b</span><span style="text-align: justify;">uying me a&nbsp;</span><a href="http://suitpossum.blogspot.co.uk/p/support.html" style="text-align: justify;">virtual beer</a>&nbsp;(using Paypal) or donating&nbsp;<a href="https://blockchain.info/address/1K2whpPvCuzckpMQD3pgMJHtVrSfYs5eqs">Bitcoin</a>, or sharing this piece on social media.&nbsp;<span style="text-align: justify;">Cheers, Brett</span></div></div></div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/ikGn_05d-PE" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com9http://suitpossum.blogspot.com/2016/03/money-is-not-store-of-value.htmltag:blogger.com,1999:blog-6454624189383327908.post-82403410566296693322016-01-12T23:21:00.000+00:002016-01-13T11:44:29.472+00:00Peer-to-Peer Review: The State of Academic Bitcoin Research 2015<div dir="ltr" style="text-align: left;" trbidi="on"><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td><a href="http://1.bp.blogspot.com/-xIspHkW03s0/VpUUzRZZeDI/AAAAAAAACuY/E8mVsPgl_S8/s1600/Bitcoinpapers.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="386" src="http://1.bp.blogspot.com/-xIspHkW03s0/VpUUzRZZeDI/AAAAAAAACuY/E8mVsPgl_S8/s400/Bitcoinpapers.jpg" width="400" /></a></td></tr><tr><td class="tr-caption" style="font-size: 12.8px;">PEER-REVIEW</td></tr></tbody></table><div style="text-align: justify;"></div><span style="text-align: justify;">I've updated my epic </span><a href="http://bit.ly/BitcoinResearch" style="text-align: justify;"><b>BITCOIN ACADEMIC PAPER DATABASE</b></a><span style="text-align: justify;">&nbsp;by adding over </span><i style="text-align: justify;">280 new papers</i><span style="text-align: justify;"> that were published&nbsp;in 2015. You can download it, and I've also included a link to a separate Google doc where you can make suggestions for papers that might have been missed.</span><br /><div style="text-align: justify;"><br />If you'd like to read about how I've built the database and the sources I've used, check out my <a href="http://suitpossum.blogspot.co.uk/2014/12/academic-bitcoin-research.html">piece about it</a> from last year. Don't expect it to be perfect - there are omissions and the citations are not always error-free - but it's a pretty comprehensive start for anyone looking to embark on furthering the state of knowledge on Bitcoin, cryptocurrency and blockchain more generally.<br /><br />The quality of papers is... um... variable and obviously I haven't had a chance to actually read most of them (as there are now over 550 in total), so don't be surprised if some are not as 'academic' or robust as you might like. That said, the quality of papers has - in general - improved over the last year. For the record, the basic definition of 'academic' in this context is: <i>showing signs of a systematic research and analysis process that extends beyond just ranting, idle speculation or marketing</i>. Note, though, that this does not narrow it to bland positivist (social) science. High quality and high effort philosophical, 'non-scientific' and even partisan political explorations are considered valid.</div><br /><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://4.bp.blogspot.com/-ABA_x6cmwLU/VpUTohn-JOI/AAAAAAAACuQ/UGZQpPy45Ao/s1600/BitcoinDatabase.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto; text-align: center;"><img border="0" height="293" src="http://4.bp.blogspot.com/-ABA_x6cmwLU/VpUTohn-JOI/AAAAAAAACuQ/UGZQpPy45Ao/s400/BitcoinDatabase.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">AIN'T THAT THE TRUTH</td></tr></tbody></table><div style="text-align: justify;"><h3>Main themes</h3>As expected, there is still tonnes of technical geekery on the Bitcoin protocol, its flaws, bugs and possible improvements. These are the papers with titles like "Threshold-optimal DSA/ECDSA signatures and an application to Bitcoin wallet security". There is, however, a noticeable uptick in papers that go beyond the technical protocol and into other - still technical, but more political - areas like regulations, taxation and legal frameworks for Bitcoin. This is a natural result of the fact that while the initial interest in Bitcoin concerned the nature of the system, the subsequent usage of bitcoin tokens in the real world opens up practical concerns like 'should it be subject to VAT?'<br /><br />In the background there is a still a steady stream of papers on questions of Bitcoin economics, the markets, price discovery, and drivers of its perceived value. The philosophy, anthropology, geography, and political dynamics of Bitcoin remain very underrepresented, but there are a nevertheless some great papers in that line (see below for examples).</div><br /><h3 style="text-align: left;">More papers in big prestige journals</h3><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="http://4.bp.blogspot.com/-Tfzrny142Bc/VpLYKv_dOwI/AAAAAAAACt0/zqCZKJW98Vs/s1600/Bitcoin%2Bpeer%2Breview%2B2.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="395" src="http://4.bp.blogspot.com/-Tfzrny142Bc/VpLYKv_dOwI/AAAAAAAACt0/zqCZKJW98Vs/s400/Bitcoin%2Bpeer%2Breview%2B2.jpg" width="400" /></a></div><br />There are definitely a greater number of pieces coming out in some top peer-reviewed journals. These are not necessarily the most interesting papers (and I don't necessarily believe that top journals carry the best research), but it shows the increasing legitimacy of Bitcoin as a mainstream research topic. Examples include:<br /><ul><li>The Journal of Economic Perspectives:&nbsp;<a href="http://www.jstor.org/stable/24292130?seq=1#page_scan_tab_contents">Bitcoin: Economics, Technology, and Governance</a></li><li>Journal of International Financial Markets, Institutions and Money: <a href="http://www.sciencedirect.com/science/article/pii/S104244311500027X">Price discovery on Bitcoin exchanges</a></li><li>Journal of Corporate Accounting &amp; Finance:&nbsp;<a href="http://onlinelibrary.wiley.com/doi/10.1002/jcaf.22016/abstract;jsessionid=81DBFF48FC740F663D32D704A9AA1C55.f04t01">Accounting Issues Related to Bitcoins</a></li><li>Oxford Journal of Legal Studies:&nbsp;<a href="http://ojls.oxfordjournals.org/content/early/2015/12/07/ojls.gqv036.abstract">Self-Enforcing Online Dispute Resolution: Lessons from Bitcoin</a></li></ul>I've also included the individual chapters from&nbsp;<i>The Handbook of Digital Currency: Bitcoin, Innovation, Financial Instruments, and Big Data.&nbsp;</i>It seems to be a pretty high quality&nbsp;collection of peer-reviewed papers, but it does cost a lot.<br /><div><br /></div><h3 style="text-align: left;">Niche papers on niche topics in niche journals</h3><div class="separator" style="clear: both; text-align: center;"><a href="http://1.bp.blogspot.com/-_WqEfbV2rlY/VpUSAkECUAI/AAAAAAAACuE/x98me5MtruA/s1600/BitcoinPeerReview.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em; text-align: center;"><img border="0" height="400" src="http://1.bp.blogspot.com/-_WqEfbV2rlY/VpUSAkECUAI/AAAAAAAACuE/x98me5MtruA/s400/BitcoinPeerReview.jpg" width="400" /></a></div><br /><div style="text-align: justify;">Beyond the explorations of standard Bitcoin themes (the prices, the regulations, the code) there are also some interesting niche research areas coming out. For example:</div><ul><li><span style="text-align: justify;">The intersection between Bitcoin and </span><i style="text-align: justify;">Islamic finance</i><span style="text-align: justify;"> has been explored in two papers:&nbsp;</span><a href="http://jibfnet.com/journals/jibf/Vol_3_No_1_June_2015/1.pdf">Bitcoin in Islamic Banking and Finance</a>&nbsp;&amp;&nbsp;<a href="http://vixra.org/abs/1501.0021">Bitcoin and Islamic Finance</a></li><li>Interesting explorations of the <i>philosophy of cryptocurrency</i>, as in:&nbsp;<a href="http://dl.acm.org/citation.cfm?id=2874264">Cryptocurrencies as narrative technologies</a></li><li>Some more <i>geographically specific papers</i>, as in:&nbsp;<a href="http://dergipark.ulakbim.gov.tr/ieyd/issue/viewFile/5000012741/5000003275#page=53">New Technology Experience in Turkey: The Case of Bitcoin</a>&nbsp;&amp;&nbsp;<a href="https://mpra.ub.uni-muenchen.de/65317/1/MPRA_paper_65317.pdf">Greece withdraws from Euro and runs on Bitcoin; April Fools Prank or Serious Possibility?</a></li><li>Analysis of politics and <i>Bitcoin ideology:&nbsp;</i><a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2589890">Bitcoin as Politics: Distributed Right-Wing Extremism</a>&nbsp;and&nbsp;<a href="http://www.rosalux.de/publication/41131/visions-of-a-techno-leviathan.html">Visions of a Techno-Leviathan: The Politics of the Bitcoin Blockchain</a>&nbsp;(by me!)</li><li>Business analysis of <i>Bitcoin companies</i>: <a href="http://aisel.aisnet.org/pacis2015/34/">Value Creation in Cryptocurrency Networks: Towards A Taxonomy of Digital Business Models for Bitcoin Companies</a>&nbsp;&amp;&nbsp;<a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2622066">'A Bad Apple Went Away': Exploring Resilience Among Bitcoin Entrepreneurs</a></li><li>Novel uses of Bitcoin: <a href="https://litigation-essentials.lexisnexis.com/webcd/app?action=DocumentDisplay&amp;crawlid=1&amp;doctype=cite&amp;docid=16+N.C.+J.L.+%26+Tech.+On.+74&amp;srctype=smi&amp;srcid=3B15&amp;key=21a06881712d9b3befbda5cb57415b97">A Bit-ter divorce: Using Bitcoin to hide marital assets</a>&nbsp;&amp;&nbsp;<a href="http://homepages.cs.ncl.ac.uk/feng.hao/files/zcoin-camera-ready.pdf">ZombieCoin: Powering Next-Generation Botnets with Bitcoin</a>&nbsp;&amp;&nbsp;<a href="http://dl.acm.org/citation.cfm?id=2813712">How to Use Bitcoin to Play Decentralized Poker</a></li></ul><div><br /></div><h3 style="text-align: left;">The 'grey literature' and student theses</h3>There are a lot of self-published research pieces, working papers and research reports from obscure institutes (sometimes this is called '<a href="https://en.wikipedia.org/wiki/Grey_literature">grey literature</a>'). I am not an academic snob who scoffs at such papers, so take a look at the various SSRN and independent papers out there. There are also a lot more long <i>student thesis papers</i> from university graduates. For example, it's worth taking a look at:<br /><ul style="text-align: left;"><li><a href="https://tspace.library.utoronto.ca/handle/1807/70121">Money for Nothing and Bits for Free: The Geographies of Bitcoin</a>&nbsp;(University of Toronto)</li><li><a href="http://triceratops.brynmawr.edu:8080/dspace/bitstream/handle/10066/16548/Barton_thesis_2015.pdf?sequence=1">Bitcoin and the Politics of Distributed Trust</a> (Anthropology, Swarthmore College)</li></ul><div><br /></div><div><h3 style="text-align: left;">Blockchain 2.0: Fork the database?</h3></div>There are some cool papers starting to come out on Blockchain 2.0 or distributed database technology. For example, check out:<br /><ul><li><a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2656501">New Kids on the Blockchain: How Bitcoin's Technology Could Reinvent the Stock Market</a></li><li><a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2580664">Decentralized Blockchain Technology and the Rise of Lex Cryptographia</a></li><li>Oh yeah, and I wrote this slightly ridiculous one:&nbsp;<a href="http://www.obsfin.ch/wp-content/uploads/Document/Scott_RCP.pdf">Blockchain Technology for Reputation Scoring of Financial Actors</a></li></ul><div>That said, it has occurred to me that an academic paper database on the topic of 'Bitcoin' might not really capture the topic of 'Blockchain', so I may consider starting a different database for papers that focus exclusively on non-Bitcoin blockchain systems. Or someone else can make that...</div><div><br /></div><h3 style="text-align: left;">Hope you enjoy &amp; please do donate!</h3><div>Bear in mind that I update this database as a piece of service to the Bitcoin community and broader academic community, and I don't get paid, so please do consider making a small donation to either my <a href="https://blockchain.info/address/14nhSWNVgCAftLdeXsRpnuRZfhzY1AgAy2">Bitcoin address</a>, or via <a href="http://suitpossum.blogspot.co.uk/p/support.html">Paypal</a>. Really hope you find the database useful!<br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="http://4.bp.blogspot.com/-OQ_uwuQtSos/VpV-9TnNeUI/AAAAAAAACuo/sSuT6qX1Jw0/s1600/Thats%2BAll%2BFolks%2B2.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="375" src="http://4.bp.blogspot.com/-OQ_uwuQtSos/VpV-9TnNeUI/AAAAAAAACuo/sSuT6qX1Jw0/s400/Thats%2BAll%2BFolks%2B2.jpg" width="500" /></a></div><br /></div><div><br /></div><br /></div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/KUALK9jyjzE" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com13http://suitpossum.blogspot.com/2016/01/bitcoin-research-2015.htmltag:blogger.com,1999:blog-6454624189383327908.post-20620449401488460362015-08-28T12:54:00.001+01:002015-09-03T11:21:09.566+01:00Dark Side Anthropology & the Art of Financial Culturehacking<div dir="ltr" style="text-align: left;" trbidi="on"><div class="separator" style="clear: both; text-align: center;"></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://1.bp.blogspot.com/-BQqVY21zzv0/VcYzXWKOYVI/AAAAAAAACo0/O6u9oKn-b1A/s1600/Bank%2BAnthropology.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="312" src="http://1.bp.blogspot.com/-BQqVY21zzv0/VcYzXWKOYVI/AAAAAAAACo0/O6u9oKn-b1A/s400/Bank%2BAnthropology.png" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">LUNAR ECLIPSE</td></tr></tbody></table><div style="text-align: justify;"><hr />Note: This essay originally appeared in the book <a href="http://irenepublishing.com/?page_id=555" style="font-style: italic;">Supramarkt: How to Frack the Fatal Forces of the Capitalocene</a>. Available for republishing under CreativeCommons<br /><hr /><br />I worked as a financial <a href="http://www.investopedia.com/terms/d/derivative.asp">derivatives</a> broker in London from 2008 to 2010, at a company clinging on for life in the midst of the financial crisis. That is not a particularly long time to work as a broker, but I was never aspiring to it as a career. I was a left-wing activist steeped in the tradition of Marxian political economy and <a href="https://en.wikipedia.org/wiki/Deep_ecology">deep-ecology</a> environmentalism, and with a background in anthropology and international development. I was on a quasi-anthropological adventure on the ‘dark side’, immersing myself in the culture of high finance in an act of subversive exploration.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://1.bp.blogspot.com/-REDCiGEN2oI/VXyWMHsiNkI/AAAAAAAACjo/k64wxZrMXT4/s1600/Photo1671%2B-%2BCanary%2BWharf%2Bfrom%2Bthe%2BDLR%252C%2Bfront%2Brow%2Bseat.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="375" src="http://1.bp.blogspot.com/-REDCiGEN2oI/VXyWMHsiNkI/AAAAAAAACjo/k64wxZrMXT4/s400/Photo1671%2B-%2BCanary%2BWharf%2Bfrom%2Bthe%2BDLR%252C%2Bfront%2Brow%2Bseat.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">HIGH FINANCE</td></tr></tbody></table><br />I say ‘quasi-anthropological’ because it is not exactly like I approached it with a formal academic mindset, and I was never attached to an academic institution. There are professional anthropologists like <a href="https://www.dukeupress.edu/liquidated">Karen Ho</a> and <a href="http://www.press.uchicago.edu/ucp/books/book/chicago/O/bo4094663.html">Caitlin Zaloom</a> who have done robust, ‘proper’ ethnographies of finance. My style was much looser, personal, emotional, and adventurous, a surreal (and even mystical) attempt to bend boundaries. It was perhaps more akin to ‘<a href="https://en.wikipedia.org/wiki/Gonzo_journalism">gonzo</a>’ journalism than a careful application of anthropological technique, albeit I had no explicit objective to write about it.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://4.bp.blogspot.com/-N-9bh7rjKRU/VeBJ2_T1vnI/AAAAAAAACsM/sobJW4b1CTA/s320/Interdealer%2BBroker.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="375" src="http://4.bp.blogspot.com/-N-9bh7rjKRU/VeBJ2_T1vnI/AAAAAAAACsM/sobJW4b1CTA/s320/Interdealer%2BBroker.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">BROKA</td></tr></tbody></table><br />I learned a lot about arcane financial instruments, financial culture, the politics of money, and the lives of people involved. I made friends with fascinating and unlikely individuals. Over time I built competence and confidence (for example, I wrote one of the <a href="https://docs.google.com/viewer?a=v&amp;pid=sites&amp;srcid=ZGVmYXVsdGRvbWFpbnxwZGlnZHJhZnR8Z3g6MjQ2MjFkOTIzOTY0NDYwMA">first reports</a> on the nascent and obscure 'sub-sector property derivatives' market), but I was never really the world’s best broker. This is partly because I did not especially care about being the world’s best broker. While my boss always yelled “sell the sizzle, not the sausage”–his code for “we are salesmen, not intellectuals”–I was mostly fascinated with how the derivatives actually worked, or why someone would really use them. I loved the weirdness of walking into some fund manager’s banal offices and having a conversation about their investment portfolios whilst being equally interested in the kitsch corporate art in the boardroom, or the view from the 35th floor. I liked to <i>touch</i> things, to feel and experience otherwise abstract concepts.<br /><br /><br /></div><div style="text-align: justify;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://3.bp.blogspot.com/-4H9z4-emJcc/VeBJ17pGKsI/AAAAAAAACrw/M4qLy2Xbbx0/s320/Finance%2BBond%2BTombstone.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="375" src="http://3.bp.blogspot.com/-4H9z4-emJcc/VeBJ17pGKsI/AAAAAAAACrw/M4qLy2Xbbx0/s320/Finance%2BBond%2BTombstone.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">A MERE 14 BILLION EUROS</td></tr></tbody></table>This somewhat unorthodox outlook gave me an anarchic, even disobedient, edge that frequently brought me into conflict with my boss. The whole experience makes for a very interesting story, with twists and turns and great characters.&nbsp;</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">But, it is not a story that I tell very often. For one thing, I do not want to rely on it, like the rogue trader <a href="https://en.wikipedia.org/wiki/Nick_Leeson">Nick Leeson</a> or the ‘Wolf of Wall Street’ <a href="https://en.wikipedia.org/wiki/Jordan_Belfort">Jordan Belfort</a> doing their sad and tiresome after-dinner speaking tours talking about their ‘bad boy’ glory days.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">For another, people find my story hard to understand. They often have discreet silos in their minds to store the concept of ‘activist’ and the concept of ‘financial sector’. When presented with a story involving both, they inevitably settle upon one of three basic strategies to reconcile them. To some, I am the ‘left-wing activist who went <i>undercover</i> in the belly of the beast’. Then there are skeptics who think I originally ‘<a href="https://en.wikipedia.org/wiki/Selling_out">sold out</a>’, failed as a broker, and then made up the story after the fact. Finally, I am often mistaken for a ‘reformed banker’, a normal financial worker who ‘saw the light’ and left the dark side to do good in the world.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">All three of those archetypes–the undercover activist, the sellout, and the reformed banker–maintain the basic distinction between the figure of the activist and that of the financial worker, which is partly why none of them accurately capture my story. The ‘reformed banker’ sits easily within established narratives–the ashamed corporate exploiter changing their path to do good in society–but it is actually the opposite to my story, which involved moving from the moral clarity of do-gooding to murky complicity with corporate power, a dirtying process not a cleaning process.&nbsp;</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The ‘selling out’ narrative is passive and defeatist, presenting the so-called activist revealing their true stripes and drifting into the corporate sector. My experience by contrast was deliberate and aggressive, an active <i>buying in</i> not a wishy-washy selling out. And, finally, the figure of the undercover activist suggests someone who maintains a clear, constant and concealed identity behind ‘enemy lines’. But I was interested in going beyond blunt distinctions between goodies and baddies, and opened myself to shifts in identity.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">If I really have to categorise myself, I am a deliberately corrupted–or <i>hybridised</i>–activist. I started from the assumption that spaces like the financial sector were the antithesis of what I stood for. I then opened myself up to that space in a deliberate act of losing myself in the ‘dark side’, or finding it within myself.&nbsp;</div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">‘Culturehacking’</h3><div style="text-align: justify;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://3.bp.blogspot.com/-jMn9twFuqfs/VXx42cnO0mI/AAAAAAAACis/3DOKOYEsTTM/s1600/Photo986%2B-%2BLansdowne%2BHouse%2Blifts.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="375" src="http://3.bp.blogspot.com/-jMn9twFuqfs/VXx42cnO0mI/AAAAAAAACis/3DOKOYEsTTM/s400/Photo986%2B-%2BLansdowne%2BHouse%2Blifts.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">ELEVATOR PITCH</td></tr></tbody></table>Of course, you might ask <i>why</i> I did this. I perceived it as an experimental form of activism, one that I later came to refer to loosely as ‘culturehacking’. It is a form of deviant anthropological activism. I say ‘deviant’ because it is not ‘straight’ activism, with its insistent focus on good versus evil. Rather, it is bent, ambiguous, dirty, corrupted, dark activism, as much directed at yourself as it is at some external party.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">It is not an approach that I advocate for everyone, but it is something to be considered by anyone wishing to get to grips with the structures of power that surround us, and to challenge them. To explain this approach though, takes some steps. It emerges at the intersection of four separate fields: immersive anthropology, activist anthropology, upward anthropology and, for want of a better term, absurdist gonzo reality gaming.</div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">Culturehacking component 1: Immersive anthropology</h3><div style="text-align: justify;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://4.bp.blogspot.com/-l5iVkkA-lIs/VdDB52fEinI/AAAAAAAACqQ/qWP9lisPyHM/s1600/ZuluAnthropology1.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="335" src="http://4.bp.blogspot.com/-l5iVkkA-lIs/VdDB52fEinI/AAAAAAAACqQ/qWP9lisPyHM/s400/ZuluAnthropology1.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">ZULU SANGOMAS WITH RANDOM WHITE GUY</td></tr></tbody></table>My aunt <a href="http://www.ru.ac.za/anthropology/people/drpenelopepennybernard/">Penny Bernard</a> is a somewhat controversial South African anthropologist known for (to use a colonial term) ‘going native’ during her research. She became a <i>sangoma</i>–a <a href="https://en.wikipedia.org/wiki/Traditional_healers_of_South_Africa">Zulu shaman</a>–and started using her dreams and visions to guide her research. When I was in high school I took great interest in Penny’s adventures, accompanying her into some truly unusual situations. I watched her drinking blood out of the neck of a slaughtered cow in an initiation ceremony, and played guitar for her posse of Zulu mystics as they worked themselves into ecstatic trance-states.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Penny’s approach is a fairly extreme form of immersive anthropology, whereby the anthropologist entangles themselves in cultural systems so deeply as to lose objective distance. Penny definitely did lose objective distance, something that my family experiences to this day as she casually gives us white beads to offer to the water spirits after a lunch at the beach. The sheer depth of her immersion in Zulu culture means she has often struggled to get proper recognition from the anthropological mainstream, who have sometimes found her approach too subjective or ‘unscientific’.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Anthropologists often use a methodology called <a href="https://en.wikipedia.org/wiki/Participant_observation">participant observation</a>, in which an ethnographer actively takes part in the day-to-day activities of a studied group whilst also maintaining a degree of distance in an attempt to be both inside and outside of the group in question. You can alter that balance in various ways. Old-school anthropology was very observation-based. In its colonial past, the Eurocentric researcher might land on an island, never talk to the people, and then make sweeping statements to explain the ‘primitive ways of the savage tribes’ without ever getting their hands dirty.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The balance changed around the 70s when a post-modern, <a href="http://anthrotheory.pbworks.com/w/page/29532672/The%20Reflexive%20Turn">reflexive strand</a> in anthropology grew strong. To simplify a complex story, it became more acceptable to engage in more deeply participatory approaches, to lose objective distance to an extent, and to write more about yourself and your emotions in the process. It also became more acceptable to suggest that perhaps there were different truths that operated in different settings. Western rationalism might reject the use of dreams to guide life, but perhaps within Zulu culture dreams are experienced as very real. Maybe there wasn’t a standard universal truth waiting to be uncovered by the objective observer under the layers of culture and ritual.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">But let’s face it, academia is still academia and there are limits to how unorthodox and reflexive your research can get. There are peer-review systems and funding bodies that require research to be ‘robust’, which is often a code-word for conformity to methodologies that prioritise observable, verifiable and quantifiable ‘hard’ evidence over intuition and introspective interpretation of personal experiences.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Needless to say, highly immersive anthropology is still controversial. That said, it is undeniable that ‘<a href="http://i.imgur.com/fiSoBJ4.jpg">going native</a>’ gives access to forms of knowledge that–while not being strictly ‘scientific’–are emotionally far closer to the lived experience of people. Penny has an intuitive understanding of Zulu culture that few ‘objective’ researchers will ever be able to gain access to.&nbsp;</div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">Culturehacking component 2: Activist anthropology</h3><div><br /></div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="http://3.bp.blogspot.com/-OxEQy57Tav0/VeBJ1jkmmlI/AAAAAAAACrs/giFQczYHFi8/s320/David%2BGraeber.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="375" src="http://3.bp.blogspot.com/-OxEQy57Tav0/VeBJ1jkmmlI/AAAAAAAACrs/giFQczYHFi8/s320/David%2BGraeber.jpg" width="500" /></a></div><br />Anthropology started as a discipline of researchers studying ‘down’, looking into the lives of marginalised groups within the political setting of colonialism. Thus the Oxford-educated gentleman found himself in Papua New Guinea considering the religious rituals of the local people, earnestly relaying it back to the institutions and learned salons of powerful London.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">As modern anthropologists have tried to shake off this image, the whole political orientation of anthropology has (arguably) shifted leftwards. Anthropology has become associated with <i>international development</i> and liberal humanitarian NGOs that work with indigenous groups, small-scale farmers and slum dwellers brushed aside by the relentless market processes of globalisation.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">It’s not like the international development industry is without its own problematic power dynamics, but many young anthropology students envision themselves in such a setting working to create intercultural understanding and progressive change. One of my first anthropology professors was <a href="http://www.ru.ac.za/anthropology/people/profchrisdewet/">Chris de Wet</a>, who specialised in designing resettlement strategies to help refugees and people forcibly displaced by large infrastructure projects like epic dams.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Alongside this broad humanitarian tradition there has also emerged a distinct strand of overtly ‘activist’ or radical anthropology. The first self-described anarchist that I met was the Serbian anthropologist <a href="https://en.wikipedia.org/wiki/Aleksandar_Bo%C5%A1kovi%C4%87">Aleksandar Bošković</a>, who taught me political anthropology in South Africa. He had a distinct dislike of nationalism and the petty bigotries it feeds on, and this impulse lay behind much of his academic work. Later I became familiar with the anarchism-inspired anthropologist&nbsp;<a href="https://en.wikipedia.org/wiki/David_Graeber">David Graeber</a>, well known for working in solidarity with Occupy Wall Street activists and others like revolutionary Kurds.&nbsp;</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Figures like Graeber are overtly political–something that does not always sit well in austere academic institutions–and have inspired some young anthropologists to use their skills to contest power structures. This form of ‘activist anthropology’ normally involves an anthropologist from a relatively powerful part of society using their position to stand up for the rights of those in less powerful situations. The aim is to provide a voice for the voiceless, or showcase the struggles of those trampled by the invisible and unaccountable forces of the global economy, from artisan mine workers in the DRC to Bangladeshi ship-breakers.&nbsp;</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Such an activist orientation might not be deliberate. It might come purely from the fact that a researcher find themselves in situations of injustice that they cannot ignore, and in which it becomes futile or callous to pretend to be engaging in some abstract exercise in academic objectivity. Revolutionary Kurds don’t give a shit about your peer-review process. They need resources, contacts, media coverage, money.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">My Aunt Penny’s explorations were not overtly politicised, but always carried an underlying belief in the validity of traditional practices otherwise marginalised by the cold rationalism of industrial society. Her position of power, and the fact that she took Zulu beliefs seriously, meant other Zulu diviners began to turn to her for help. By default she would find herself standing up for their rights to maintain sacred water spaces over the rights of, for example, property developers. These are the seeds of activist anthropology.</div><div style="text-align: justify;"><br /><hr /><div style="text-align: center;"><i>NOTE: If you have enjoyed this so far, you might like&nbsp;<a href="http://suitpossum.blogspot.co.uk/p/the-heretics-guide.html">my book</a></i></div><hr /></div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">Culturehacking component 3: Upward anthropology</h3><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="http://4.bp.blogspot.com/-cZfxDHAXaHQ/VXyNoSkgIII/AAAAAAAACjE/D8zSkfnO57M/s1600/FinancialAnthropology.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="416" src="http://4.bp.blogspot.com/-cZfxDHAXaHQ/VXyNoSkgIII/AAAAAAAACjE/D8zSkfnO57M/s400/FinancialAnthropology.jpg" width="500" /></a></div><br />In 1969, <a href="https://en.wikipedia.org/wiki/Laura_Nader">Laura Nader</a> wrote an article called "<a href="http://www.dourish.com/classes/readings/Nader-StudyingUp.pdf">Up the Anthropologist: Perspectives Gained From Studying Up</a>". In it, Nader asked the following question: “What if, in reinventing anthropology, anthropologists were to study the colonizers rather than the colonized, the culture of power rather than the culture of the powerless, the culture of affluence rather than the culture of poverty”.&nbsp;</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">It was a call to action that inspired some anthropologists to turn their attention towards the upper echelons of their own societies, rather than the disempowered Amazonian farmer. The power dynamic was very different. The idealistic young Harvard graduate walking into the Sudanese village would awkwardly stand out like a beacon, but that same person might blend inconspicuously into the corporate deco of an oil trading firm or bank. You might feel different to the oil traders, but you have enough cultural similarity as to not appear entirely alien and strange.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">There are now many very interesting examples of upward anthropology, whether it be <a href="http://www.anthro.ucla.edu/faculty/hannah-appel">Hannah Appel</a> of UCLA studying the offshore oil sector, or <a href="http://faculty.sites.uci.edu/wmmaurer/">Bill Maurer</a> of UC Irvine studying the global electronic payments system. Fascinating opportunities exist for ethnographic explorations into the realms of mining, weapons firms, advertising agencies, surveillance states, and the rising technological stars of Silicon Valley. And, of course, we can apply upward anthropology to the financial sector.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The <i>covert</i> anthropologist going into the halls of Goldman Sachs finds themselves in an interesting situation. The key feature of banking environments is not necessarily that everyone there is born an ‘elite’ of society–actually there is a great diversity of people from different backgrounds involved in finance–but rather that the roles available are <i>structurally elite</i> positions that hover above the rest of the economy. It does not really matter who in particular fills those positions, but whoever ends up there finds themselves in the shoes of an elite, channelling elite power. They become <i>de facto</i> more powerful as an individual, and begin to get access to things previously never thought accessible.</div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">Culturehacking component 4: Gonzo reality gaming</h3><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="http://3.bp.blogspot.com/-68puIv183OQ/VeBJ2ODlvmI/AAAAAAAACr0/gBzTm876UL8/s320/GonzoJournalism.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="357" src="http://3.bp.blogspot.com/-68puIv183OQ/VeBJ2ODlvmI/AAAAAAAACr0/gBzTm876UL8/s320/GonzoJournalism.jpg" width="500" /></a></div><br />If you take the three anthropological traditions described above and blend them together, you get <i>immersive activist upward anthropology</i>. Sounds fun?</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The problem with anthropology, though, is that it is still Anthropology. It is an official academic discipline with self-conscious methodologies and norms and it is subject to the institutional constraints of academia: the need to produce formal articles, attend conferences and direct your work to peers rather than the public. Anthropology is a <i>career</i>, and it is a career within precarious institutions that have funding and reputation to protect. There are limits on how politically engaged and personal your research can get within such a setting.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Furthermore, as an <i>official</i> anthropologist, you perhaps only get access to powerful institutions at the goodwill of the institution letting you in. The hedge fund might allow you to sit around in the office and watch the action provided you do not go bad-mouthing them or interfering too much. Studies of finance can thus pick up a restrained, academic, and conflicted feel.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">In my view, upward-activist-immersive anthropology can become the less defined field of ‘culturehacking’ by dropping strictly formal anthropological practice and rather adopting an informal ‘anthropologically inspired’ orientation. Culturehacking might involve adopting an&nbsp;outlook that blends an anthropological impulse or ethic with a spirit of subversion and deviance.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">In my own case within the financial sector, I was not a self-conscious ethnographer. I did not take notes whilst mimicking the process of phoning up finance directors to try sell them derivatives. No, I was really phoning finance directors and <i>really</i> trying to sell them derivatives and becoming <i>really</i> implicated in the politics of finance in the process. I cultivated a ‘going with the flow’ acceptance of the process, never explicitly attempting to break the illusion.&nbsp;</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">During my two years of immersion I only wrote reflective notes twice, and even then it was not in an academic form, but rather in a form resembling stream-of-consciousness ‘<a href="http://www.theguardian.com/cities/2015/may/20/gonzo-journalism-cities-tribes-ethnographer-hunter-s-thompson">gonzo’ journalism</a>, emotionally charged writing about the turmoil and exhilaration of the lived experience, with little attempt at cool objectivity.&nbsp;</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">People fight over the meaning of Gonzo, but one thing that appears clear is that it can be as much a way of living as it is a formal style. It is a practice in which you maintain a loose awareness that you are reporting on something, but always subordinate that awareness to the process of experiencing the thing in question: experience first, then (maybe) story later. The emphasis is very heavily on authentic participation and not that much on explicit observation, and when the observation comes in, it is as much observation of yourself as it is of others.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">This is a fine line to walk, because gonzo-style mindsets can put you in positions where you become implicated in things, and one mark of ‘reality’–as opposed to simulations or virtual reality–are situations where your actions have concrete material impacts on others. When combined with a subtle awareness that you are in fact to some extent also playing games, it creates a feeling of surrealism or even absurdism. You walk into a meeting with an earnest trader and he totally thinks you are having a deadly serious conversation about derivatives, but in your mind you are also giggling, thinking “This is ridiculous. Why are you talking to me?”&nbsp;</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Pekko Koskinen of the <a href="http://www.todellisuus.fi/en/periaatteet/">Reality Research Center</a> in Finland specialises in designing ‘live action’ games, sending people off on obscure missions in cities. He recently described to me the obscure practice of <i>reality gaming</i>. Unlike ‘alternative reality games’, which involve explicitly imagining a different world within the setting of the real world–like a child on a train imagining they are a superhero on a mission–reality gaming involves interacting with others in real life settings whilst having a background awareness that you are subject to subtle rules that they are not aware of. The hidden or submerged agenda gives a game-like tone to situations. His description of this gamer sub-culture immediately resonated with experiences I had when immersed in the world of finance. I might be able to have a perfectly normal – even <i>authentic</i> – conversation with a trader, exchange business cards and talk seriously about future plans for collaboration, but in the background have a residual awareness that there is some form of manipulation or play going on.&nbsp;</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://assets.flicks.co.nz/images/movies/landscape/24/2406a0a94c80406914ff2f6c9fdd67d5_567x210.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://assets.flicks.co.nz/images/movies/landscape/24/2406a0a94c80406914ff2f6c9fdd67d5_567x210.jpg" height="183" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">DEEPLY EMBEDDED</td></tr></tbody></table><br />And this gets strange. One the one hand, it can be abusive. Very good-natured people can give you time and goodwill whilst you in turn mess with them. It is worth looking into the real-life case of the undercover FBI agent '<a href="https://en.wikipedia.org/wiki/Joseph_D._Pistone">Donnie Brasco</a>', who got himself so deep into the mafia that he found himself emotionally tied up in the lives of gangsters who would subsequently suffer real consequences of his actions.&nbsp;</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">On the other hand, when you engage in these forms of extreme mimicry (or perhaps extreme <a href="https://en.wikipedia.org/wiki/Method_acting">method acting</a>&nbsp;like that pioneered by <a href="https://en.wikipedia.org/wiki/Ten_Days_in_a_Mad-House">Nellie Bly</a>) and get emotionally tied into the lives and thought processes of others, the boundaries between games and reality become blurry. This is where the danger of <i>capture </i>comes in. You can start to lose yourself, or feel your identity literally bending, splitting or reconfiguring as your mind seeks to reconcile your original sense of identity with the cultural world you find yourself in. Old certainties about right and wrong can warp or implode as the social support for them is removed. In the case of Donnie Brasco, he did lose himself, beginning to feel like he belonged in the mafia and that he was responsible to friends within their ranks.&nbsp;</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Activists get worried about this breakdown of the self-other divide: ‘Get the information behind enemy lines’, they say, ‘but dammit don’t lose yourself!’&nbsp;</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">But this is where they miss the point. Because part of the very point <i>is</i> to lose yourself.</div><div style="text-align: justify;"><br /><br /><hr /><div style="text-align: center;"><i>NOTE: If you'd like to support my ongoing Creative Commons writing, please consider buying me a&nbsp;<a href="http://suitpossum.blogspot.co.uk/p/support.html">virtual beer</a>, or <a href="https://blockchain.info/address/1K2whpPvCuzckpMQD3pgMJHtVrSfYs5eqs">donating Bitcoin</a></i></div><hr /></div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">Levels of hacking: Shallow info gathering to deep reality bending</h3><div><br /></div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="http://4.bp.blogspot.com/-Qbdhcx8H-I8/VeBJ2jflr-I/AAAAAAAACsE/ArQ68zYzeco/s320/HackerEthos.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="345" src="http://4.bp.blogspot.com/-Qbdhcx8H-I8/VeBJ2jflr-I/AAAAAAAACsE/ArQ68zYzeco/s320/HackerEthos.jpg" width="500" /></a></div><br />There is no standard definition for the concept of ‘hacking’ and the broader ‘hacker ethic’ (if you're interested in this debate, check out my somewhat controversial recent piece on the '<a href="http://aeon.co/magazine/technology/how-yuppies-hacked-the-original-hacker-ethos/">gentrification of hacking</a>'). This is partly because hacking is not a strict set of activities–like automobile engineering or accounting might be–but rather a certain <i>feel</i>, sensibility or outlook applied to different situations. One attempt to describe this comes from the journalist Steven Levy, who suggested that:</div><blockquote class="tr_bq" style="text-align: justify;">Hackers believe that essential lessons can be learned about the systems–about the world–from taking things apart, seeing how they work, and using this knowledge to create new and more interesting things</blockquote><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Hacking, on the one hand, is the process of seeking access to something that is normally not easily accessible, with the intent to explore and deconstruct its inner workings. This exploration, however, is essentially <i>subversive</i>. It is exploration with intent to deviate from standard paths and bend established boundaries. Hacking in the realm of computers might involve exploring lines of code with intent to bend or exploit that code in unorthodox ways. Hacking in the realm of cities might involve gaining access to underground train tunnels or obscure logistics yards on the outskirts of town, with the intent to see things you are not <i>supposed</i> to be interested in. Hacking in the realm of culture might involve exploring and uncovering layers of cultural code with intent to bend cultural institutions.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">There are different depths of culturehacking though. It might take the form of shallow attempts to gain temporary access to closed social spaces, like a con-man getting someone to drop their guard in order to get some information, or an activist hanging out at a financial conference in order to get information on tax avoidance. Or, it can be deep attempts to breach the very structure of the normal binaries that exist between ‘self and other’ and ‘insider and outsider’.</div><div style="text-align: justify;"><br /></div><h4 style="text-align: justify;">Level 1: Gaining technical knowledge</h4><div><br /></div><div style="text-align: justify;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://4.bp.blogspot.com/-4nR4Xb91apU/VeBJ3Pe5xqI/AAAAAAAACsI/oqyS0FFGNSU/s320/OTC%2BDerivatives.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="375" src="http://4.bp.blogspot.com/-4nR4Xb91apU/VeBJ3Pe5xqI/AAAAAAAACsI/oqyS0FFGNSU/s320/OTC%2BDerivatives.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">BESTSELLER</td></tr></tbody></table>If you undertake an adventure in the financial sector, whether it be in the form of an undercover activist, an embedded anthropologist, or a surrealist reality gamer, you are probably going to learn a lot of technical stuff that might turn out to be useful. Indeed, it is helpful to understand the difference between different banks, funds, financial instruments, concepts, and techniques, and for this reason alone immersive experiences can be desirable and empowering. Getting into the nitty gritty of finance helps to dispel myths and misconceptions that are not worth getting distracted by, and this knowledge in turn is useful in debates and battles around finance. Having technical knowledge obviously helps activists argue on more level terms with financial professionals who might otherwise wield obscure concepts as a way to baffle opponents.</div><div style="text-align: justify;"><br /></div><h4 style="text-align: justify;">Level 2: Gaining empathy and emotional knowledge</h4><div><br /></div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://i.imgur.com/NFhyrcw.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://i.imgur.com/NFhyrcw.jpg" height="375" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">HURRICANE FUTURES</td></tr></tbody></table>Technical knowledge on finance, though, is only so useful. Does it really matter whether or not you know the <a href="https://en.wikipedia.org/wiki/Black%E2%80%93Scholes_model">Black-Scholes</a> pricing model for financial options contracts? Probably not. More important than learning such specialist information is the process of getting a feel for the human dynamics and people within the sector. Much energy is wasted within activist circles fetishising individual financial workers as villains rather than seeking to understand the deeper structures underpinning the system. There is a something fundamentally wrong with any analysis that says ‘the financial sector is bad because the people in it are corrupt’. The financial sector is a political and cultural ecosystem and it is far more <i>useful</i> to learn to empathise with those involved than to demonise them.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Indeed, the demonisation of ‘the banker’ figure only helps to reinforce the existing power dynamic that the financial sector thrives on. It continues to buy into the shroud of mystique and conspiracy aesthetics that financial workers themselves like to indulge in. <i>Within</i> the financial sector are internal ideologies that position financial workers as highly talented, driven, quasi-genius jet-setters that everyone else is envious of. Incoming external critiques that characterise financial professionals as ‘Wolves of Wall Street’ are filtered through, neutralised, and then appropriated by such ideologies. A far more damning strategy is to uncover that financial workers are in fact just ‘Average Joes’.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">It is only internal to the system that you discover that the public narrative on finance helps maintain the insider vs. outsider divide that financial professionals use to construct their sense of identity. When you are within Goldman Sachs it will not appear to you as The Vampire Squid, but rather as your home, or your domain. You move beyond merely understanding it in the abstract, and begin to feel the internal structures <i>intuitively</i>, emotionally and empathetically.</div><div style="text-align: justify;"><br /></div><h4 style="text-align: justify;">Level 3: Coming to terms with the unknown and ambiguous</h4><div><br /></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://i.imgur.com/GjN6TGQ.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://i.imgur.com/GjN6TGQ.jpg" height="375" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">DIFFERENT ANGLES ON FINANCE</td></tr></tbody></table><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div>Culturehacking is a way to build knowledge, but more importantly it teaches you what you <i>don’t know</i>. Many activists implicitly believe that financial professionals are in possession of some type of ‘secret knowledge’ unknown to most ordinary people, which they use for personal gain. In reality though, most financial professionals do not fully understand the system they form part of. They may understand how to do a valuation analysis, or account for credit default swaps, but the everyday business of finance involves using partial, imperfect knowledge to respond to particular practical challenges or tasks. The best traders and financiers all know that there is no singular means of ‘doing finance’, and are at ease with that imprecision.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Of course, the public perception that finance is a set body of ‘secret knowledge’–rather than a mutating uncertain practice–forms part of the structure of financial power. Financial professionals rely on that ‘we know something you don’t’ illusion to intimidate the public.<br /><br /></div><div style="text-align: justify;"></div><div style="text-align: justify;">You cannot ‘defeat’ the financial sector by buying into those public terms, trying to counter one apparently fixed model of reality with another fixed model of reality, like a Marxist trying to win an argument against a neoclassical economist. Rather, you refuse to buy into the idea that a singular model exists in the first place, and embrace the ambiguity. Immersive adventures that wreck your pristine preconceptions are one of the quickest ways of building such openness and becoming alive to the contradictory messiness of systems that otherwise appear coherent and all-powerful.<br /><br /></div><div style="text-align: justify;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://1.bp.blogspot.com/-jo_pPMxetjo/VcZJDMOj_hI/AAAAAAAACpY/gq6-qEcY6BY/s1600/Illuminati.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="198" src="http://1.bp.blogspot.com/-jo_pPMxetjo/VcZJDMOj_hI/AAAAAAAACpY/gq6-qEcY6BY/s200/Illuminati.jpg" width="200" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">"THERE'S NO GODDAMN ILLUMINATI"</td></tr></tbody></table><br /></div><h4 style="text-align: justify;">Level 4: Deviant hybridisation (as immunisation)</h4><div><br /></div><div style="text-align: justify;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://1.bp.blogspot.com/-QTrHRFvM4rI/VcY4Nz2QfdI/AAAAAAAACpA/bbEx2xlmJVw/s1600/Blade.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="283" src="http://1.bp.blogspot.com/-QTrHRFvM4rI/VcY4Nz2QfdI/AAAAAAAACpA/bbEx2xlmJVw/s400/Blade.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">YIN &amp; YANG</td></tr></tbody></table>And this takes us to perhaps the most important point. Hacking is not just about breaking into something to uncover information or mess with it. The true spirit of hacking involves queering, deviating from established paths and making fluid the boundaries that are otherwise viewed as concrete and static.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The traditional activist often seeks to stay away from contradiction, seeking purism and clear narratives. Built into the identity of many radicals is a sense of shock and dismay at how large corporate beasts appear to work. They might feel angry, overawed, powerless and poorly resourced in comparison to them. They do not want to <i>touch</i> such beasts, or be implicated in them.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">A lifetime like that can backfire and give rise to the jaded ex-activist who has given up and ‘become realistic’, taking glee in an almost deliberate watering down and rejection of their original position, scoffing at the futile attempts of naïve campaigners to change the real world.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Powerful corporate entities such as huge banks have no problem with this dynamic. Indeed, they rely on civil society being somewhat overawed by them, and it does not really matter whether it be in the form of disgust or of reverence. Furthermore, the binary notion of the idealistic dreamer of a better society versus the hard-nosed pragmatist of the real world works to their advantage. The former is easily brushed off by contrast to the latter.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Perhaps what we really need is to break that binary. We need activists with a critical mindset who are also able to walk freely on the ‘dark side’ without getting distracted, shocked or dismayed, freer to act within situations of contradiction. One reason why you may wish to engage in deep culturehacking expeditions, then, is to <i>hybridise</i> yourself, and therefore immunise yourself against both the shocked naivety of purity and the sneering disdain of cynical ‘hard-nosed’ pragmatism.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">To understand this, consider the (admittedly light-hearted) analogy of the film <a href="http://www.imdb.com/title/tt0120611/">Blade</a>, in which the vampire council is particularly fearful of a ‘daywalking’ human-vampire hybrid called Blade who is able to interact with both humans and vampires. The critical culturehacker might become such a figure, breaching the established boundaries of contestation by hybridising themselves, internalising the DNA of mainstream finance and fusing it to existing activist impulses.<br /><br />My experiences have enabled me to work on campaigns&nbsp;<a href="http://gofossilfree.org/">challenging fund managers</a> who continue to plough money into fossil fuels, commodity traders who <a href="http://www.globaljustice.org.uk/food-speculation">disrupt global food markets</a>, corporations that steer money via networks of <a href="http://www.theguardian.com/global-development-professionals-network/2015/jul/07/the-anatomy-of-a-campaign-tax-justice-actionaid">tax havens</a>, and&nbsp;<a href="http://moveyourmoney.org.uk/">banks</a> that continue to pay little heed to the environmental destruction they back.<br /><br />Do you want to challenge financiers who back dictators and surveillance companies? Do you want to be able to enter a corporate general meeting and critically engage with CEOs as a <a href="http://shareaction.org/become-shareholder-activist">shareholder activist</a>? Do you want to build networks of insider contacts who can give you information? Do you want to blend like a chameleon into the fabric of conferences on arms financing? Do you want to feel fused into the emotional and human foundations of powerful institutions otherwise cloaked in technocratic, economic jargon? If so, perhaps it's time for some culturehacking.</div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">Brave new world</h3><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://1.bp.blogspot.com/-R0zT5ZakJwY/VcdfnEmQd0I/AAAAAAAACp4/XwThGvLLseI/s1600/DarkSideFreeBird2.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="281" src="http://1.bp.blogspot.com/-R0zT5ZakJwY/VcdfnEmQd0I/AAAAAAAACp4/XwThGvLLseI/s400/DarkSideFreeBird2.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">BEYOND LEFT WING &amp; RIGHT WING</td></tr></tbody></table>Of course, there is always the chance that you will be captured and will never come out, discovering yourself years later tired and wasted in the M&amp;A division of J.P. Morgan, having forgotten who you are and why you did this. But, maybe it is worth the risk. The alternative may be to end up years later tired and wasted in a backwaters of critical academia, or tired and wasted in a large NGO filling out grant applications. What do we have to lose exactly? The subversive spirit of deviant dark-side anthropology might be a powerful and exciting force in the huge battles for social, ecological and economic justice we have before us.<br /><br />(P.S. If you'd like to learn more, or bounce ideas, feel free to <a href="http://i.imgur.com/iePoqph.png">email me</a>)<br /><br /><br /></div><hr /><h3 style="text-align: left;">If you enjoyed this piece...</h3><span style="text-align: justify;">This piece took me a long time to write, and I don't get paid, so if you'd like to support my ongoing Creative Commons writing please consider&nbsp;</span><br /><ol style="text-align: left;"><li><span style="text-align: justify;">Buying me a&nbsp;</span><a href="http://suitpossum.blogspot.co.uk/p/support.html" style="text-align: justify;">virtual beer</a>&nbsp;(using Paypal)</li><li>Donating <a href="https://blockchain.info/address/1K2whpPvCuzckpMQD3pgMJHtVrSfYs5eqs">Bitcoin</a></li><li>Sharing it on your Facebook wall, or Tweeting it out</li></ol>Thanks!<br />Brett</div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/nFsIXpC0xcM" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com2http://suitpossum.blogspot.com/2015/08/financial-anthropology-culturehacking.htmltag:blogger.com,1999:blog-6454624189383327908.post-47786083473628935512015-06-17T14:47:00.001+01:002015-11-23T18:37:26.155+00:00Algorithmic surrealism: A slow-motion guide to high-frequency trading<div dir="ltr" style="text-align: left;" trbidi="on"><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: justify;"></div><div class="separator" style="clear: both; text-align: center;"><a href="http://2.bp.blogspot.com/-eo2lR9FmMYw/VYF82XWM4EI/AAAAAAAACk8/tOG3fulL3R8/s1600/HighFrequencyTrading1.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="210" src="http://2.bp.blogspot.com/-eo2lR9FmMYw/VYF82XWM4EI/AAAAAAAACk8/tOG3fulL3R8/s400/HighFrequencyTrading1.jpg" width="500" /></a></div><div class="separator" style="clear: both; text-align: justify;"><br /></div><div class="separator" style="clear: both; text-align: justify;"></div><hr /><div style="text-align: justify;">Please note: Part 1 of this essay appeared in the Feb 2015 edition of <a href="https://www.contributoria.com/issue/2015-02/5492b15e38cdedc144000003">Contributoria</a>. It is published and modified here under a Creative Commons license.</div><hr /><div style="text-align: justify;"><br /><h3 style="text-align: center;"><u>PART 1 (3500 Words)</u></h3><h3 style="text-align: center;">A 900 million microsecond primer on high-frequency trading</h3><br />In the time it takes you to read this sentence, a <a href="http://en.wikipedia.org/wiki/High-frequency_trading">high-frequency trading</a> (HFT) algorithm, connected to a stock exchange via “low latency” trading infrastructure, could make, perhaps, 1,000 trades.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">I say 'perhaps', because it really depends on how long you pause on those commas I put in the sentence. If you’re an individual with great respect for commas you might give the algorithm a chance to throw in a few hundred more orders.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Let’s just clarify this. That means computers owned (or leased) by a firm somewhere can 1) suck in data from a stock exchange, 2) process it through a coded step-by-step rule system (algorithm) to make a decision about whether to trade or not, 3) send a message back to the exchange with an order for shares of ownership in a company – for example, a company that makes children’s toys – 4) get the order executed and confirmed, and 5) repeat this maybe 250 times a second.&nbsp;</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Well, it could be more or less than that, too, and to be honest, few people seem to actually know how fast these algorithmic engines trade. But even if it’s only trading 50 times a second, or even a mere 10 times a second, it’s still inhumanly fast.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Having worked in financial trading markets – albeit in much slower <a href="http://en.wikipedia.org/wiki/Over-the-counter_%28finance%29">over-the-counter swaps</a> markets – and having worked on a variety of advocacy campaigns related to financial trading, this is a subject that fascinates me. The purpose of this piece, though, is not necessarily to convince you on whether or not HFT is a good or bad thing. Rather, it is to provide some frames through which to look at the phenomenon, and through which to understand the debates and news stories that will undoubtedly continue to be written about it in the years ahead.</div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">1.1: Putting HFT in context</h3><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://2.bp.blogspot.com/-qklgb3ekgzM/VYF83HYJA4I/AAAAAAAAClY/amd8p7Rn_es/s1600/TradingPit.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="326" src="http://2.bp.blogspot.com/-qklgb3ekgzM/VYF83HYJA4I/AAAAAAAAClY/amd8p7Rn_es/s400/TradingPit.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><span style="font-size: 12.8000001907349px;">HUMANS: SO SLOOOWWWW</span></td></tr></tbody></table><br />There was a time, in the distant past of the 1970s, when trades on stock exchanges were basically the exclusive domain of human actors. Whether it was the prudent, long-term investor buying a portfolio of stocks for a retirement fund, or the cowboy speculator buying and selling in rapid succession, the process was always limited by the speed of the human mind, and the time taken to actually pick up a phone and put an order through. Even the fastest speculator would still take a number of minutes to complete trades.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Nowadays, this is no longer the case. The confluence of computer technology, coding techniques and communications infrastructure have made it possible for traders to automate human thought processes by turning them into algorithms that can be executed using beams of light in fibre optic cables. The time taken to complete a trade has dipped into the realm of milliseconds and even microseconds, mere thousandths and millionths of seconds.&nbsp;</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">This has brought to life the surreal realm of high-frequency trading. It hasn’t come out of nowhere – it’s been a long time developing, since the early days of “<a href="https://en.wikipedia.org/wiki/Program_trading">program trading</a>” in the 80s, gradually getting faster and faster – but it is only in recent years that people have started to take notice. In particular, it came to the fore during the <a href="http://en.wikipedia.org/wiki/2010_Flash_Crash">Flash Crash</a> of 2010, when the US stock market inexplicably crashed and then righted itself within a few short minutes, an event many attributed to HFT algorithms going haywire.<br /><br /><h3>1.2: How should I feel about this?</h3><div class="separator" style="clear: both; text-align: center;"></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://www298.pair.com/rjmweb/albums/300C/lego_faces_r620x349.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://www298.pair.com/rjmweb/albums/300C/lego_faces_r620x349.jpg" height="281" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">MIXED FEELINGS?</td></tr></tbody></table>I do not presume to know how you <i>should</i> feel about this. People are routinely worried about harmless things, and routinely completely unworried about incredibly harmful things. What we can say, though, is that to many ordinary people going about day-to-day work involving actual labour of some sort, the concept of a robot trader making 100 trades in the time it takes them to sip a cup of tea makes them feel uneasy. The practice may just seem unnatural, or complex, or out of control, or just weird.<br /><br />Even if it seems to do no harm, it’s hard to even conceptualise what it is. I mean, aerospace engineers do something that’s pretty complex and I can’t tell you how they technically do it, but I nevertheless understand what they do in principle: They design flying machines that enable people to travel long distances. A high-frequency trading algorithm designer, on the other hand, does what exactly?<br /><br />Well, we know they make money, but normally people make money by doing something that has some use value to society, like fitting pipes into your toilet or designing your business card or slaughtering cattle to make hamburgers. If we had to ask "what is the purpose of HFT?" on the other hand, people would probably pause for a while before trying to answer. The obscurity of the technique and the goal naturally raises the suspicion that this is just another scheme by bloated financial elites to extract more from society.<br /><br />Or course, to those financial professionals who work in HFT, people who are freaked out about it might be viewed a bit like superstitious, ignorant peasants who don’t understand markets. They want people to override that intuitive sense that there is something alien about HFT, and to just chill out: <i>“We are scientists, hard-nosed rationalists, stop your unfounded waffling about this. It’s perfectly natural. We wouldn’t make money if our service wasn’t ‘demanded’… right?”</i><br /><br />They find allies with certain <a href="http://www.forbes.com/fdc/welcome_mjx.shtml">market economists</a> and frequently go on to add an explicitly moral edge of indignation: <i>“We are helping markets by offering a valuable service of liquidity and price discovery. If you stop us, all of you will suffer.”</i><br /><i><br /></i><br /><h3>1.3: Trading, to technical trading, to algo trading, to HFT</h3><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="http://2.bp.blogspot.com/-tKzO5_ol7jo/VYF81iYBeiI/AAAAAAAAClc/x1buClmmO1g/s1600/AlgorithmicTradingEvolution.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="140" src="http://2.bp.blogspot.com/-tKzO5_ol7jo/VYF81iYBeiI/AAAAAAAAClc/x1buClmmO1g/s400/AlgorithmicTradingEvolution.jpg" width="500" /></a></div><br />Let’s take a step back, and try put this activity into context. Financial markets like a stock-market facilitate the buying and selling of financial instruments, which are contracts that give you rights to receive returns over time. They tend to host different players with different time horizons. On the outer rings you get the huge institutional investors such as pension funds. They arrive in the market occasionally and make big investments, buying up large numbers of shares, often with a view to holding them for a number of years. Then, in the inner rings, you get faster, more fickle, players – we might call them <i>traders</i> – who make money by jumping in and out of markets, like nimble sharks swimming between the slower pods of huge whales.<br /><br />Not all trading is the same though. If you want to conceptualise the road to high-frequency trading...<br /><ol><li><i>Start by understanding the general concept of trading</i>: Financial traders buy and sell financial instruments, such as shares in companies. They hope to buy at a lower price than they sell at, thereby making a profit.&nbsp;</li><li><i>Now understand Technical Trading</i>: Traders have different techniques of speculation. They may, for example, spend hours researching the records of a particular company to make assessments, a practice called <a href="http://www.investopedia.com/terms/f/fundamentalanalysis.asp">fundamental trading</a>. Alternatively, they may analyse the activities of other traders in a market&nbsp;to make decisions. This 'technical analysis' of&nbsp;price, order and volume data generated by other traders leads to <a href="http://www.investopedia.com/university/technical/">technical trading</a>.&nbsp;</li><li><i>Now imagine that automated into Algorithmic Trading</i>: One might decide to automate the process of technical trading, such that an algorithm analyses an incoming stream of price, order and volume data and makes trades under certain conditions. We call this <a href="http://en.wikipedia.org/wiki/Algorithmic_trading">algorithmic trading</a>. (note: it's possible to make a distinction between algorithmic and automated trading, but for ease let's just assume these are the same)</li><li><i>Then imagine that sped up into High-Frequency Trading</i>: If you accelerate that process of automated algorithmic trading to extreme speeds, you are doing high-frequency trading.&nbsp;</li></ol>HFT is thus best initially thought of as <i>very fast algorithmic trading</i>, which itself is automated technical trading, which itself is a sub-branch of broader trading. It can be contrasted with, for example, slower, fundamental trading, which is what people like <a href="https://en.wikipedia.org/?title=George_Soros">George Soros</a> do (he and his analysts actually sit in a room and watch the world and then make big bets on it). Finally, remember that we can again contrast this entire world of trading with the world of long-term <i>investing</i>, which is what the big, slow pension funds do. To return to the earlier ecosystem analogy, then, HFT firms are kind of like piranhas among the sharks among the whales.</div><div style="text-align: justify;"><br /><hr /><div style="text-align: center;"><i>NOTE: If you have enjoyed this so far, you might like&nbsp;<a href="http://suitpossum.blogspot.co.uk/p/the-heretics-guide.html">my book</a></i></div><hr /><h3 style="text-align: left;"><span style="text-align: justify;"><br /></span></h3><h3 style="text-align: left;"><span style="text-align: justify;">1.4: How to set up an HFT firm</span></h3><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://1.bp.blogspot.com/-9wcTfTzDVnQ/VYF82O-4LmI/AAAAAAAAClg/eY-ueX1Ok1c/s1600/HFT-trading-firm.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="283" src="http://1.bp.blogspot.com/-9wcTfTzDVnQ/VYF82O-4LmI/AAAAAAAAClg/eY-ueX1Ok1c/s400/HFT-trading-firm.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><span style="font-size: 12.8000001907349px;">"MUST. BE. FASTEST!"</span></td></tr></tbody></table><br />Different trading organisations might have slightly <a href="http://www.nasdaq.com/investing/glossary/h/high-frequency-trading">different reasons</a> to engage in HFT. Some big banks, for example, use it as a tool to take a big order and fragment it into lots of small orders, like using a dispersion nozzle to turn a fire-hose jet into a fine market mist that people don’t readily notice. Many HFT players, though, are pure short-term speculators, specialist proprietary trading firms and hedge funds. If you wanted to set one of these up, here are some things you’d do.<br /><br />Firstly, get some start-up money - either your own or from some really rich people. Secondly, incorporate and capitalise a company (maybe set up a management company in London, where you actually sit and work, and then create a separate firm in the Cayman Islands that actually holds the money, and then draw up a contract that says that the London one works for the Cayman one).<br /><br />Then you hire some people, perhaps through a specialist recruitment agency, or perhaps by popping onto LinkedIn to <a href="https://www.linkedin.com/vsearch/p?type=all&amp;keywords=%22High%20frequency%20trading%22&amp;orig=FCTD&amp;rsid=337860081419294013134&amp;pageKey=member-home&amp;trkInfo=tarId%3A1419293866689&amp;openFacets=N,G,CC&amp;f_N=S">search for HFT professionals</a>. Maybe you’d like to hire <a href="https://www.linkedin.com/pub/steve-hicks/0/987/716">Steve</a>, who knows how to make expensive HFT hardware work for you, or <a href="https://www.linkedin.com/in/fabfer">Fabio</a> who can write you C++ code and build your software architecture. <a href="https://www.linkedin.com/pub/mark-davies/18/258/37">Mark</a>&nbsp;here has almost nothing written on his profile, which suggests he works exclusively through headhunters, typical of ex-Cambridge, ex-Goldman Sachs employees.<br /><br />Offer this prime talent lots of money, and get them to design some algorithms. Start with the conceptual design and then get your C++ guy to <a href="http://weitopia.files.wordpress.com/2011/01/instrumentordermanager-cpp.png">code it for you</a>. You might even want to <a href="https://www.google.co.uk/patents/US20130325684">patent your algorithms</a>, or the systems architecture you’ve designed.<br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://weitopia.files.wordpress.com/2011/01/instrumentordermanager-cpp.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="220" src="https://weitopia.files.wordpress.com/2011/01/instrumentordermanager-cpp.png" width="500" /></a></div><br />This isn’t a pedantic technical article about the exact nature of HFT technology though. There are huge amounts of jargon-laden bumf and <a href="http://stackoverflow.com/questions/17256040/how-fast-is-state-of-the-art-hft-trading-systems-today.">geeky discussions</a> on the internet if you’re really interested in the tech, but the essence of what you have to do is this: you must cut some kind of a deal with a brokerage firm and a stock exchange to <i>get your awesome algorithm as close to the stock exchange as possible</i>! You must minimise the physical distance between the computer your algorithm is in, and the computer that the exchange’s order-matching system is in, so that the two can enter into an intense, light-speed dialogue with each other.<br /><br />There is a whole arcane technical sub-field around such <a href="http://en.wikipedia.org/wiki/Ultra-low_latency_direct_market_access">low-latency direct market access</a> infrastructure. Normally, if a person wants to buy or sell shares, they’d have to go via a broker who is a member of the exchange they want to buy or sell shares on. That takes waaaaaaay too long for an HFT trader though. Screw that, you need to go directly into the heart of the exchange without passing through normal brokerage processes. Ideally, you want to find a way to directly <i>co-locate</i> with an exchange, which is a fancy way of saying you need to literally set up your computer in the room next to their computers.<br /><br />To sort out co-location, check out the services offered by <a href="https://www.nyse.com/connectivity/colo">NYSE</a>, <a href="http://www.nasdaqtrader.com/Trader.aspx?id=colo">Nasdaq</a>, <a href="http://www.londonstockexchange.com/products-and-services/connectivity/hosting/proximityhosting/accredited-hosting.htm">London Stock Exchange</a>, <a href="http://www.eurexchange.com/exchange-en/technology/co-location-services">Eurex</a>, <a href="http://www.cmegroup.com/trading/colocation/co-location-services.html">CME</a> and even the <a href="https://www.jse.co.za/news/jse-launches-high-tech-colocation-centre">Johannesburg Stock Exchange</a>. Here is the Toyko Stock Exchange describing the difference between its <a href="http://www.tse.or.jp/english/system/faq/index.html#title_2_16">co-location area and its proximity area</a>&nbsp;(both give you a 100-200v power source, but the co-location area has a greater cooling capacity of 8kVa, so you might want to use that if your algorithm is likely to make the computer melt). Here is a <a href="https://www.youtube.com/watch?v=mEF0mauxxdo#t=129">promotional video</a> they made about it. The exchanges have a whole raft of “connectivity” services. Maybe this involves giving you nice high-spec cable and cooling systems, whilst also setting you up with premium data feeds.<br /><br />Needless to say, the whole array comes with an (initially) baffling array of <a href="http://www.investopedia.com/articles/active-trading/042414/youd-better-know-your-highfrequency-trading-terminology.asp">jargon</a>&nbsp;-&nbsp;a lot of it associated with the <a href="http://www.forbes.com/sites/quora/2014/01/07/what-is-the-technology-stack-like-behind-a-high-frequency-trading-platform/">tech stack</a>&nbsp;-&nbsp;but in the end it comes down to a pretty simple formula: You lease a computer next to the exchange. You install your algorithms into it. The exchange then sends your algorithms a big data feed through a cable, your algorithms process it and shoot orders back through the cable. And you try to design your rig so that it does this all faster than anyone else. Maybe you’ll sit in an office a few kilometres away monitoring it all, building a newer version of your system.<br /><br />If you need help setting all this up, you can pick up some low-latency trading infrastructure support and consultancy from the likes of <a href="http://financialsystems.sungard.com/resources/capital-markets/brochures-datasheets/valdi-low-latency-market-data-and-trading-infrastructure">Sungard</a>, <a href="http://www.cisco.com/web/strategy/financial/algo_speed.html">Cisco</a>, <a href="http://www.algospan.com/Overview">Algospan</a>, <a href="http://www.interactivedata.com/index-de.php/productsandservices/content/show?id=Trading+Infrastructure+Services">Interactive Data</a>, and <a href="http://www.latonetworks.com/solutions/low-latency-infrastructure.aspx">Lato Networks</a>. Otherwise, learn from the existing masters, the actual HFT firms that have already got this stuff down. Like most powerful, behind-the-scenes institutions, these firms often have obscure, unrecognised names and uninformative, slightly vague websites. Check out, for example, <a href="http://www.virtu.com/">Virtu</a>, <a href="http://www.atdesk.com/">ATD</a>, <a href="https://www.kcg.com/">KCG</a>, <a href="http://www.tradebot.com/">Tradebot</a>, <a href="http://www.tradeworx.com/">Tradeworx</a>, <a href="http://www.liquidcapital.com/algorithmic-trading">Liquid Capital</a>, <a href="http://www.choppertrading.com/">Chopper Trading</a>, Citadel’s <a href="http://www.bloomberg.com/news/2014-04-11/citadel-fund-said-to-quadruple-with-high-frequency-trades.html">Tactical Trading Fund</a>, <a href="http://www.tower-research.com/">Tower Research</a> and <a href="http://www.rgmadvisors.com/">RGM</a>.<br /><br /><h3>1.5: Perfect the electronic Art of War</h3><div class="separator" style="clear: both; text-align: center;"></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://3.bp.blogspot.com/-2gXWYC-hOec/VYF81ppzM-I/AAAAAAAAClQ/93rmjTjktnY/s1600/HFT%2Balgorithm.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="345" src="http://3.bp.blogspot.com/-2gXWYC-hOec/VYF81ppzM-I/AAAAAAAAClQ/93rmjTjktnY/s400/HFT%2Balgorithm.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><span style="font-size: 12.8000001907349px;">PIMP MY ALGORITHM</span></td></tr></tbody></table><br />Now, it’s not like these firms all use the same <a href="http://www.investopedia.com/articles/active-trading/092114/strategies-and-secrets-high-frequency-trading-hft-firms.asp">strategies</a>. Some use statistical analysis and <a href="http://en.wikipedia.org/wiki/High-frequency_trading#Statistical_arbitrage">arbitrage</a> of various sorts, while others operate exclusively in “market microstructure” strategies, which seem to involve knowing the intimate electronic guts of the exchange systems and how they can be, um, taken advantage of. One might engage in <a href="http://en.wikipedia.org/wiki/Flash_trading">flash trading</a>, which some argue is a form of legalised front-running. You might bludgeon markets with orders through ”<a href="http://www.investopedia.com/terms/q/quote-stuffing.asp">order stuffing</a>″ (what HFT whistle-blower Dave Lauer calls a <a href="https://www.youtube.com/watch?v=itxbyXO67XY">financial DDOS attack</a>).<br /><br />You may layer orders across a market like fairy dust, perhaps trying to incite outbreaks of ”<a href="http://www.zerohedge.com/news/2012-12-14/momentum-ignition-markets-parasitic-stop-hunt-phenomenon-explained">momentum ignition</a>“, which appears to be a form of subtle market manipulation. Some have aggressive trading strategies aimed at proactively following trends and taking opportunities, while others might be more passive, like electronic <a href="https://en.wikipedia.org/?title=Aikido">Aikido</a>-bots using minimal exertion of energy. It’s worth taking a read of <a href="http://www.finalternatives.com/node/10055">this piece</a> by Irene Aldridge if you’re interested in some of the strategies. This introduction <a href="http://www.rajeevranjansingh.com/how-is-it-implemented">here</a>&nbsp;is also useful.<br /><br />As an aside, if you wish to get a feel for the language and spirit of the scene, it’s always worth browsing the techie discussions of the professional finance quants on places like the <a href="http://www.wilmott.com/messageview.cfm?catid=38&amp;threadid=37580&amp;FTVAR_MSGDBTABLE=">Wilmott Forums</a>. Such people are immersed in the nitty gritty of day-to-day finance and generally have a decent knowledge of this stuff. If you’re game for grappling with jargon, check out a user like Quantumar, who likes to lay down a stream of financial cowboy speak (It doesn’t matter if you don’t understand it, but it’s useful to mine these conversations for clues):<br /><blockquote class="tr_bq">“Most of [HFT] is a very simple speed game of arbitrage. They either arb cash vs futures markets or in equities they get hit/taken in one ECN and sell/buy on somewhere else, either all or most of the money is made from a fraction of rebates in market making equities. Some few firms do milliseconds momentum trading, they realise someone is coming in with orders and they jump ahead of the orders (because they are faster to reach the market) they push the market one cent and sell back to the original buyer… They also use flash orders to jump ahead of big orders. Some also look into depth of book and try to trade as well. There are a few more strategies they use in equities. Also some firms look at options markets and arb the delta hedgers... Most of the strategies are not mathematical but related to microstructure of the markets… These shops are ultra high frequency shops, there could be up to millions of orders a day depending on how many markets and how actively they trade. They require mostly really good C++ skill sets, API connectivity knowledge on the software side. Hardware side they require really low level hardware knowledge such as bypassing the stack and tricking kernels. They also look for lan/wan guys who can push data a few microseconds faster in the network. They use very expensive and specialised equipment. A simple switch that is decently fast costs 50K… All the data that is available to HF groups is available to all traders, the difference is they trade on that information before you can even receive it in your computer. How fast they can get it and react in the market is the difference. They are dealing with single-digit microsecond latencies in their networks and computers, not milliseconds.”</blockquote><br /><h3>1.6: The (narrow) academic debate</h3><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="http://4.bp.blogspot.com/-mwDPWTqaPw4/VYF82Ruck1I/AAAAAAAAClE/3huayH9qz3c/s1600/High-Frequency-Trading.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="278" src="http://4.bp.blogspot.com/-mwDPWTqaPw4/VYF82Ruck1I/AAAAAAAAClE/3huayH9qz3c/s400/High-Frequency-Trading.jpg" width="500" /></a></div><br />Away from all the <a href="https://www.youtube.com/watch?v=2u007Msq1qo&amp;list=PLPdYK1wsM8tRxS1Yg_mTzMbOnko6eZpmW&amp;index=3">Youtube video explanations</a>, journalistic reporting and forum discussions on HFT, there is obviously also a body of academic research. If you’re looking for robust arguments rather than Quantumar’s gunslinging “’let me tell you how it is” street-smarts, the research-oriented individual might browse the academic journals. There is research emerging from finance and economics departments, unsurprisingly, but also from a few other disciplines.<br /><br />A friend of mine who teaches university-level finance noted that a potential problem in HFT research is that researchers rely on HFT firms to give them data and hence are always at risk of being intellectually captured by the firms they rely upon, perhaps even engaging in forms of self-censorship. To add to that, the research often seems to try be as dry and technical as possible; it sounds like it emerges in a world without politics, culture or history, or, for that matter, actual people, making it deathly dull and hard to read. The research questions are narrow, with an obsessive focus on questions like HFT’s impact on <a href="http://www.thehedgefundjournal.com/node/6402">liquidity and price discovery</a>.<br /><br />In essence, liquidity refers to how easy it is to trade. If I arrive in a market and I’m immediately able to sell or buy, there is high liquidity. If, on the other hand, it takes me a long time to buy or sell, there is low liquidity. Some of the debate around HFT and liquidity concerns whether HFT adds to, or just absorbs, liquidity. In other words, do HFT firms, on net, help other participants to trade more easily, or do they get in the way? This debate includes questions of whether the liquidity they might offer is real or not. For example, the robot traders may constantly signal that they’re willing to trade, and then run away.<br /><br />'Price discovery' is a somewhat fetishised term for the process whereby the apparently correct price for something is figured out through a group of market participants 1) reacting to information by 2) placing buy and sell orders that are 3) mediated through some market infrastructure. So if it’s announced that a firm is about to go bankrupt and the stock price suddenly rockets upwards, it’s likely that something has gone wrong with the price discovery process. The question is, does HFT help reveal the true sentiment in a market, or does it just cause instability and weird anomalies like the <a href="http://en.wikipedia.org/wiki/2010_Flash_Crash">Flash Crash</a>?<br /><br />There is also an emergent body of research on whether what HFT firms do is legal, or constitutes some form of market manipulation or “front-running” at the expense of other market participants. And, finally, we are starting to see a trickle of articles about the human dimensions of HFT, the actual people who run these operations, the politics of it all, the <a href="https://sniperinmahwah.wordpress.com/">anthropology</a> and how it reflects the broader trajectory of the global economy. [at a later date I will hopefully update this with a proper database of this research!]<br /><br /><h3>1.7: Research, and lobbying, informs a regulatory debate</h3><div class="separator" style="clear: both; text-align: center;"></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://www.screenused.com/images/auction_jul13/13233_4.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://www.screenused.com/images/auction_jul13/13233_4.jpg" height="212" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">"PRESENT YOUR IMPARTIAL EVIDENCE"</td></tr></tbody></table><br />Much of the news on HFT is about the political battles and the threats of regulators to clamp down on it. Theoretically, the regulatory debate is supposed to be informed by the academic research, but of course we might also suspect that the regulatory debates are equally informed by <a href="http://www.efinancialnews.com/story/2012-09-06/european-principal-traders-association-hft-lobby-group-doubles-members">lobbying</a>.<br /><br />Lobbying itself often takes the form of groups picking particular academic research pieces to showcase to regulators. The <a href="http://modernmarketsinitiative.org/">Modern Markets Initiative</a>, for example, has curated a heartwarming selection of friendly <a href="http://modernmarketsinitiative.org/research-studies/">research articles</a> to back up its claim that HFT creates a <a href="http://modernmarketsinitiative.org/investor-benefits/">market utopia</a> that “saves individual investors’ money by lowering the cost of trades” and that it “democratises today’s marketplace”.<br /><br />When not getting spammed by such transparently self-serving groups, the regulatory bodies have been putting a fair amount of research into this themselves, churning out <a href="http://www.bankofengland.co.uk/Pages/Search.aspx?k=high%20frequency%20trading">papers</a> and <a href="http://secsearch.sec.gov/search?utf8=%E2%9C%93&amp;affiliate=secsearch&amp;query=high+frequency+trading">briefings</a>. They might also receive submissions from those firms and reforms groups that are on the warpath <i>against</i> HFT. This includes groups like <a href="http://www.themistrading.com/">Themis Trading</a>, who, in the words of author Michael Lewis, have “done more than anyone to explain and publicise the predation in the new stock market” (see their extensive <a href="http://blog.themistrading.com/wp-content/uploads/2015/03/HFT-Bibliography-2015.pdf">collection of critical HFT research</a>). Other critics include data provider <a href="http://www.nanex.net/">Nanex</a> and the aforementioned <a href="https://twitter.com/DLauer">David Lauer</a>. There is also a whole raft of renegade <a href="https://www.youtube.com/watch?v=6sbnH7nYBgc">financial pundits</a> from the financial blogosphere who speak out against it.<br /><br />Types of regulations that are being suggested include taxation of HFT (something along the lines of a financial transaction tax), and regulations concerning the speed of trading, the order size, and order-to-trade ratio (how many orders a trader can put in, relative to how many times they actually trade). These debates are at various stages in the US, the EU and Asia. Take a look, for example, at the <a href="http://regulation.fidessa.com/ataglance/german-high-frequency-trading-act/">German High-Frequency Trading Act</a>.<br /><br />Incidentally, it’s worth looking at the dynamics of similar regulatory battles over <a href="http://suitpossum.blogspot.co.uk/2012/03/of-toast-precautionary-principle.html">commodity market speculation</a>.&nbsp;Commodity exchanges like CME Group pointed to a single study by a dude at the University of Illinois to argue for why speculation didn’t negatively destabilise commodity prices, despite the fact that many other studies argued it did. HFT firms, like commodity trading firms, take advantage of the complexity of the situation and slowness of regulators. They implicitly take the position that “until it’s proven wrong, it’s right”, rather than “until it’s proven right, we should take precautions”.<br /><br /><hr /><div style="text-align: center;"><i>NOTE: If you'd like to support my ongoing Creative Commons writing, please consider buying me a <a href="http://suitpossum.blogspot.co.uk/p/support.html">virtual beer</a></i></div><hr /><h3 style="text-align: center;">PART 2 (4500 words)</h3><h3 style="text-align: center;">Five frames through which to view HFT</h3><hr /><div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://upload.wikimedia.org/wikipedia/commons/7/70/Rorschach_blot_01.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://upload.wikimedia.org/wikipedia/commons/7/70/Rorschach_blot_01.jpg" height="326" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">WHAT DO YOU WANT TO SEE?</td></tr></tbody></table><br /></div>To some extent, I am indifferent as to whether or not HFT disrupts markets. Partly this is because I don’t take markets to be some kind of holy construct that obviously serve humankind, and that thus cannot be defiled. I mean markets have long been institutions of systematised abuse, where those with more power can use the apparently apolitical act of exchange to extract advantage.<br /><br />But, let’s for a moment imagine that market infrastructures do generate some kind of mysterious holy force that always makes society better off. What exactly does HFT do to help this? Well, the refrain from the proponents is that HFT facilitates liquidity in markets for financial instruments. This statement comes complemented by wrath-of-god like warnings about what will happen if this liquidity is reduced. <i>If you allow liquidity to go down, your grandmother's pension will suffer!</i><br /><br />Goddamn LIQUIDITY is always trotted out like it’s the greatest service to humankind since fire was invented. Now, I don’t like to be (too) judgmental, but in the grand scale of societal injustices, ‘slightly lower liquidity in Microsoft shares’ barely ranks, and in the grand scale of human achievements, ‘slightly higher liquidity in Microsoft shares’ barely ranks either. It’s not like the creator of the algorithm has invented a new way to harvest energy from lightning bolts. And certainly, using your university degree in advanced computing to contribute to microscopically more accurate ‘price discovery’ doesn’t mean you get to go down in the grand book of human virtue.<br /><br />But of course, this whole appeal to morality from the lobbyists is obviously completely disingenuous. It’s not like people are getting jobs in HFT firms because they're possessed with an evangelical desire to improve liquidity to help pensioners. Creating an epic light-speed infrastructure array to exploit microscopic price discrepancies has got about as much to do with helping pensioners as Formula 1 racing has to do with improving transportation for the elderly.<br /><div><br /></div><div><h3>2.1: The unstoppable progress of rational agents without agency</h3><div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://www.madaboutscience.com.au/store/images/ironFilings_2.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://www.madaboutscience.com.au/store/images/ironFilings_2.jpg" height="283" width="400" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">WE'RE INDEPENDENT AGENTS, RESPONDING RATIONALLY TO INCENTIVES!</td></tr></tbody></table><br />Regardless of appeals to the morality of HFT, there is another more subtle line. Note the name of the aforementioned pro-HFT lobby group – The <i>Modern Markets Initiative</i>. The name is a deliberate attempt to paint anyone who is concerned about HFT as an enemy of modern progress, standing in the way of the inevitable triumph of a more efficient, rational world. The tech-as-progress dogma is widely entrenched in our society, like a hard-to-remove piece of social malware that disarms people's critical impulses. The '<a href="http://en.wikipedia.org/wiki/Luddite">luddite</a>' impulse is ridiculed, rather than celebrated as a healthy skepticism towards tools of the powerful.</div><div><br /></div><div>But this tech fetishism becomes even more entrenched when it meets with the mainstream economics belief in the virtue and inevitability of <i>rational economic agents pursuing self-interest</i>. It’s here that the dual utopian visions of tech-as-unstoppable-progress and markets-as-unstoppable-progress merge into one stream. If the technology can be built, and provided that some kind of profit can be made by entrepreneurs taking the short-term opportunity to build it, an&nbsp;<i>inertia</i>&nbsp;sets in, an imagined inability to stop the ‘progress’, regardless of whether it is actually useful in the long term or not.<br /><br />Attempting to stand in the way of such a stream of individual actions is seen as futile, and even unjust, like trying to stop a river flowing down a hill. Indeed, this is part of the implicit background thinking that leads to terms like ‘arms race’ being used to describe the development of HFT (and other technologies).&nbsp;<i>If one entrepreneur doesn’t do it, another will</i>. Ever heard a tech person saying 'you cannot stop technology'?</div><div><br /></div><div>There is a deep irony to this vision. Above all, there is a distinct lack of agency projected when people insist that ‘this cannot be stopped’, but it gets coupled with a vision of thousands of entrepreneurs all individually impelled through ‘agency’ towards something that will occur regardless of whether they choose to make it occur or not. In other words, a kind of agency towards executing a preordained plan.</div><div><br />This vision of the <b>rational-agent-without-agency</b> is something that plagues much mainstream thinking on economics, a strange blend of extolling the virtue of the risk-taking individual whilst simultaneously asserting that they’re irrelevant, mere puppets acting out the will of ‘the market’.</div><div><br /></div><div>Here, for example, is big-shot venture capitalist Mark Cuban explaining <a href="http://blogmaverick.com/2014/04/03/the-idiots-guide-to-high-frequency-trading/">his take</a> on HFT: <i>‘"If you know the game is rigged and that it is legal to participate in this rigged game, would you do everything possible to participate if you could? Of course you would"</i>. It's a statement dripping in contradictory ambiguity, a vision of independent agents acting like pre-programmed robots that have to abide by some imagined law of economics. MUST.PARTICIPATE.IN.RIGGED.GAME.&nbsp;</div><div><br /></div><div>In reply I'd say: "No Mark, I am not a character out of an Econ 101 textbook. I am perfectly capable of overriding the impulse to play the rigged game, and to decide to not play it. In saying it is inevitable, you’re just trying to justify your own inability to do that." The problem, though, is that provided enough people think like Mark, the inertia continues to be presented as <i>natural</i>, a collective action problem portrayed as a liberator of previously unrealised human potential.</div></div><div><br /></div><div><h3>2.2: Automation: People create robots to crunch (big) data</h3><div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://1.bp.blogspot.com/-3Nz7Xot4bj0/VYF82u5hkPI/AAAAAAAAClo/URScUUmbEs4/s1600/HighFrequencyTradingAlgorithm.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="295" src="http://1.bp.blogspot.com/-3Nz7Xot4bj0/VYF82u5hkPI/AAAAAAAAClo/URScUUmbEs4/s400/HighFrequencyTradingAlgorithm.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><span style="font-size: 12.8000001907349px;">GOOD DOG, GO FETCH!</span></td></tr></tbody></table><br />To be one of the aforementioned economic agents in the HFT space, you need to master three things. Firstly, you need to master the physical hardware: the actual wires, cables and <a href="http://shorttermmemoryloss.com/nor/tag/hft/">microwave towers</a>. Then, you must be able to master the data streams travelling through those wires, to collect it and arrange it in an efficient manner. Then you must be master of the algorithm that knows what to do based on that data. The algorithm is your automated avatar in the marketplace, ‘thinking’ and acting on your behalf.</div><div><br /></div><div>Your algos must work with lots of data, but it’s worth noting that <a href="http://www.wallstreetandtech.com/electronic-trading/hft-and-big-data-not-a-technology-barrier-but-a-cultural-one/a/d-id/1268417?">not everyone</a> perceives HFT as a realm of ‘big data’. The hype around 'big data', to some extent, concerns the growing capability to do real-time processing of huge dams of data (like modelling of climate on supercomputers), but ‘real-time’ doesn’t necessarily mean microsecond-level speed. It makes no difference whether it takes you 5 minutes or 20 microseconds to know a hurricane is forming. Much HFT, on the other hand, is more about brute reaction time to a high pressure hose of data, rather than a dam.</div><div><br /></div><div>That said, being able to react at microsecond speed to colossal dams of data is emerging. The HFT company <a href="http://www.tradebot.com/about.asp">Tradebot</a> (based in <a href="https://goo.gl/maps/52m2c">this building</a> in Kansas City), has been known to trade a billion shares in one day, making millions of individual trades. In their own words, “Market data changes trigger our system to produce new orders in a few hundred nanoseconds. We collect and analyze billions of data rows to find the edge. Our Hadoop cluster is over two petabytes.” A <a href="http://searchbusinessanalytics.techtarget.com/definition/Hadoop-cluster">Hadoop cluster</a> is an array for holding massive amounts of data, and two petabytes is 2 million gigabytes. How many gigabytes is your computer?</div><div><br /></div><div>Regardless of whether all HFT strategies should be considered a realm of Big Data, HFT is a subset of the broader realm of algorithmic trading, which is on the cutting edge of <i>financial <a href="http://en.wikipedia.org/wiki/Data_science">data science</a> </i>more generally. To create financial algorithms often first involves ‘back-testing’ potential algorithms on huge banks of historical market data, essentially engaging in “what if I’d done this between 1980 and the present” time-travel exercises. If you find an algo that seems to work on past data, you can crystalise it, then send it to work on real-time data in the present.</div><div><br /></div><div>John Fawcett of <a href="https://www.quantopian.com/">Quantopian</a>&nbsp;notes with a <a href="http://www.wallstreetandtech.com/electronic-trading/the-new-finance-era-from-hft-to-big-data/a/d-id/1268323?">certain amount of joy</a> how automated algorithms “remove human emotion and bias from trading decisions”, opening up a brave new world of emotionless finance. You use statistical back-testing to find the most ‘rational’ strategy, then lock it in a hard-coded shell that “never falls prey to sentimental pitfalls”. You too can now isolate and strip away your emotion from your rationality, automating your rational self in the form of your <a href="https://www.quantopian.com/algorithms"><i>very own algorithm</i></a> that you can keep like a pet, or a slave, to do things for you.</div><div><br /></div></div><div><h3>2.3: Automation: Robots create (big) data to crunch people</h3><div class="separator" style="clear: both; text-align: center;"></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://www.researchinlearningtechnology.net/index.php/rlt/article/viewFile/16283/html/51661" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://www.researchinlearningtechnology.net/index.php/rlt/article/viewFile/16283/html/51661" height="400" width="377" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">NETWORK, OR SPIDER'S WEB?</td></tr></tbody></table><br />We tend to understand the concept of actively using technology to achieve certain ends (exercising agency), but we find it harder to conceptualise the potential loss of agency that technology can bring. It’s a phenomenon perhaps best demonstrated with <i>email</i>: I can use email to exercise my agency in this world, to send messages that make things happen. At the same time, it’s not like I truly have the option to <i>not</i> use email. In fact, if I did not have an email account, I would be severely disabled. There is a contradiction at play: The email empowers me, whilst simultaneously threatening me with disempowerment if I refuse to use it.<br /><br />In HFT and algorithmic trading more generally, we have a range of disparate players each individually working on building little pieces of the infrastructure and single algorithms that they control. When we zoom out though, we might see the outlines of something bigger. While individual algorithms appear as isolated, individual slaves to creative masters, the collective array of algos can begin to seem like a spiders web displaying emergent properties that are not under the control of any particular human master.<br /><br />Or, let's put it this way: Traditional sci-fi depictions of 'artificial intelligence' always show an individual mad genius building and unleashing an overlord computer that then kind of behaves like a hyper-powerful human. In reality, if an overlord technological system was to be built, it would not be a single computer, and neither would it be built by a single mad genius, and it wouldn't really look or feel anything like a human. It would be an interwoven mesh of technology, brought to life by individuals who never explicitly designed it, with no obvious human face or interface.<br /><br />In reality we already see these emergent forms all around us, but are not well trained to recognise them. They emerge whenever &nbsp;humans ‘lock themselves in’ to reliance on a technological infrastructure, and lock themselves in to a point where they cannot pull back out due to the interconnections and dependencies that subsequently emerge. Those infrastructures then, have a certain power over society, even though their individual nodes may be under the control of particular people.<br /><br />I have previously referred to this concept – albeit in a different context – as the&nbsp;<a href="http://www.e-ir.info/2014/06/01/visions-of-a-techno-leviathan-the-politics-of-the-bitcoin-blockchain/">Techno-Leviathan</a>, technological infrastructures that seem passive and neutral but that contain a kind of latent organising force over the people who seemingly contract into using them.<br /><div><br /></div><div>So, the question to ponder is whether, when viewed&nbsp;<i>collectively</i>, we might begin to imagine the high speed mesh of individual algorithms as resembling one a giant robot, brought to life by hapless human agents-without-agency, all believing themselves to be shit-hot independent gunslingers of the market, but actually just a disconnected workforce for an emergent AI. Or at least that’s what Stephen Hawking&nbsp;<a href="http://www.bbc.co.uk/news/technology-30290540">might argue</a>.</div><div><br /></div>Even if you don't buy that abstract concept, we might look into the more concrete realm of individual algorithms to see the shifting power dynamics:&nbsp;there is much excitement about ‘machine-learning’, the creation of self-teaching algorithms that seek constant enlightenment and self-improvement, creating their own personalities. Artificial intelligence is not just being able to process stuff, it’s the ability to learn.<br /><br />Indeed, the FT’s Sally Davies <a href="http://www.ft.com/cms/s/0/5aa7ac30-27b4-11e4-ae44-00144feabdc0.html#axzz3Q7ALGo81">notes</a> that “GFT, which works with big global investment banks, has partnered with Massive Analytic, a big data start-up, to develop trading software based on “artificial precognition”. Even if it doesn't end up in the realm of Minority Report, it stands to be a total mindfuck for regulators.<br /><br /><br /><h3>2.4: Disconnected boys with dangerous toys</h3><div class="separator" style="clear: both; text-align: center;"></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://1.bp.blogspot.com/-2CS0CKEWE_4/VYF81pkHzfI/AAAAAAAAClA/7wotsY24kPQ/s1600/Financial-Trader-Culture.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="251" src="http://1.bp.blogspot.com/-2CS0CKEWE_4/VYF81pkHzfI/AAAAAAAAClA/7wotsY24kPQ/s400/Financial-Trader-Culture.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><span style="font-size: 12.8000001907349px;">NERD CULTURE MEETS JOCK CULTURE</span></td></tr></tbody></table><br />Having detoured into the possibilities for an emergent rise of the machines, we might go back down to earth and look into the human world of HFT. Who are the individual people involved, and what are the cultural dynamics?<br /><br />Obviously there are many different types of people involved in HFT. I'm sure many of them are lovely, but the last algo trader-boy I met was a guy from <a href="http://www.ronin-capital.com/index.php/home">Ronin Capital</a>&nbsp;who&nbsp;happened to be one of the most condescending assholes I’ve experienced in a while, coming packaged with one of those heavy-set wrist-watches and a shirt with expensive fibres, both marking out a rising member of the financial elite.<br /><br />He spent a lot of time in the gym, because you don't develop big muscles from sitting behind a computer. This seemed to fit quite well with the pseudo <a href="http://www.ronin-capital.com/index.php/home">Samurai aesthetic</a> of his firm. If you enter Ronin’s website, there are gong sounds and pictures of swords, as if the traders behind the interface of the computers want to imagine themselves engaged in hand-to-hand combat with a vicious opponent that could actually kill them. Of course, given that they are probably educated at elite universities, it is unlikely that they’ve ever had any exposure to actual bodily harm, and probably never will.<br /><br />This is a dynamic in the financial sector more broadly: highly educated people, frequently male, induced into believing they’re engaged in some kind of mortal combat, despite the fact that they’re surrounded with abundant opportunities and money, and despite the fact that they’re sitting in an air-conditioned office at a computer engaged in nothing remotely like combat or physical hardship. This pseudo-battle is perhaps best exemplified by TradeBot, who without a trace of irony <a href="http://www.tradebot.com/about.asp">state</a> that:<br /><blockquote class="tr_bq">The stock market is tough. It owes us nothing. It punishes our mistakes. Others have more money, more power, more connections. We are underdogs. We keep learning. We innovate. Every day is a new fight. Technology is our weapon. We make millions of small trades. We cut losses. We identify opportunities. We focus. The market can be beaten. We love the game.</blockquote><br />When assessing these banal market-as-mortal-combat statements, I like to use the <i>WWII Grandfather Test</i>, which involves me asking myself what my grandfather would say about it. He was a bomber pilot during WWII and got shot down over Germany, crash-landing a flaming heap of metal on the coastline after probably killing a lot of people with incendiary bombs. Ask your granddad: what do you think about Tradebot’s battle with the ‘the market’?<br /><br />I don’t know about your granddad, but I like to think mine would have said, <i>‘I have no bloody idea what they are doing, but I know it has no connection to real people living in real places’</i>. Seriously Tradebot, if you really think you’re so tough, go do some <a href="http://ngm.nationalgeographic.com/2014/05/shipbreakers/gwin-text">shipbreaking in Bangladesh</a>, and you’ll quickly discover that an actual battle isn’t a ‘game’.</div><div><br /></div><div>Indeed, you can always sense something is a realm of cushioned elites when the language is all about ‘players’ jostling with each other. Sports and games are simulacrums of combat, not actual combat. You only perceive the real world as a ‘game’ when you’re in certain types of environments that provide a big cushion to protect you – like an elite, global city, for example. There is a particular <i>urban geography</i>&nbsp;to these infantile computer games. When one is sitting in a nice modern city full of other fairly superficial activities, things like HFT gain a certain legitimacy. They are creatures of urban, tech-centric society, where couches, excel-spreadsheets and lattes abound.<br /><div><br /></div><div>It’s only in such a setting that you can imagine grown adults bickering with each other over the meterage of cable connecting them to a stock exchange. Imagine the furious exec shouting at the co-location manager,&nbsp;<i>‘Our cable is a metre longer than Tradebot’s cable, why the fuck did you allow that! We’ve lost a nanosecond!’</i><br /><br />It’s kind of embarrassingly juvenile when you stand back a moment, look through granddad’s eyes, and watch a serious-faced discussion about whether <a href="http://www.computerworlduk.com/news/applications/3452852/oracle-java-virtual-machine-putting-the-brakes-on-high-frequency-trading-says-azul-ceo/">C++ or Java</a> will achieve the holy grail of zero latency. We’re not talking about old-school realpolitik here, where some tycoon is battling another tycoon for control of some vast mining territory. Regardless of whether HFT is damaging or not, it's just kind of... um... lame.</div></div><div><br /></div><div><h3>2.5: HFT and the financialisation of meaningless noise</h3><div><div class="separator" style="clear: both; text-align: center;"></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://www.dearspace.net/wp-content/uploads/2013/07/Big-Bang-Television-Static-590x353.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://www.dearspace.net/wp-content/uploads/2013/07/Big-Bang-Television-Static-590x353.jpg" height="297" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">AS YOU CAN SEE, OUR PRODUCT CAPTURES MEANINGFUL MARKET MOVEMENTS&nbsp;</td></tr></tbody></table><br />‘Financialisation’ is a term laden with various interpretations, but it tends to refer to the increasing importance of the financial sector in overall economic life, the infusion of financial sector norms and morality into everyday culture, and the process by which previously uncommoditised things get turned into financial products that can be traded on financial markets.<br /><br /></div><div>That’s a pretty broad description, so I prefer to initially think of financialisation as the end result of things being made 1) ownable 2) investable and 3) tradable. The greater the intensity and extent of these elements, the greater the degree of financialisation of that thing.&nbsp;</div><div><ol><li>Ownable means the thing can be claimed by someone, and that they can exclude others from its use. ‘Ownability’ relies on being able to isolate and separate something off from things around it. For example, the <a href="https://en.wikipedia.org/?title=Enclosure">enclosure movement</a> involved turning land into demarcated parcels that could be separated from each other and privately owned</li><li>Investable means turning the thing owned into an asset that delivers returns over time. While a piece of land might be something that you can own, and have an emotional connection too, you might begin to view it as an 'asset' when it is used to produce yields over time. It might be perceived as a generic 'investment', rather than a piece of land with a particular history and life</li><li>Tradable means that asset can be passed on to others</li></ol></div><div>Still, moving land from person to person is slow and personal. Land only really gets financialised with it is turned into a generic ‘asset class’ that disconnected investors can quickly buy into or out of. So, imagine a financialisation process in this sequence:<br /><div><ol><li>I own a farm. I can use it to make food</li><li>I own a share in my neighbour’s farm. I can claim a portion of the produce</li><li>I own a share in a small private farming company. I get annual monetary dividends and read the reports</li><li>I own a share in a large publicly traded farming corporation. I get monetary dividends and can sell my shares to others at any point on the stock exchange</li><li>I own a share in a huge agriculture <a href="https://en.wikipedia.org/wiki/Exchange-traded_fund">exchange-traded fund</a>&nbsp;(ETF) that owns shares of farming corporations all over the world</li><li>I own a share in a hedge fund that rapidly trades a portfolio of such ETFs, and bets on such ETFs via derivatives</li></ol></div></div><div>We might say that financialisation is the creeping process by which new frontiers of ownership are isolated, and turned into investable products that a wide, disconnected range of dispassionate investors can emotionlessly slide into and trade with each other. The more distant you are from the thing you’re invested in, and the easier it is to trade, and the faster the trading, the more disconnection you can experience.<br /><br />But, there is a point when the speed of trading hits a tipping point, and takes you into a realm that is <i>no longer about the farm, or anything real for that matter, at all</i>.</div><div><br /></div><div>This is where HFT take us. While it ostensibly seems to be about the trading of shares on stock-markets (and other things like currencies), in reality HFT has nothing to do with shares. The ‘thing’, or <i>object</i> that is being traded is not actually [a financial instrument], but rather it is [the microscopic tremblings of a financial instrument].<br /><br />This is a subtle point to convey. Much normal speculative trading is done fast, with a trader quickly buying something and then trying to sell it to someone else. Nevertheless, there is always a sense of a 'thing' being manipulated in some way. Just like when you are flipping a hot potato, there is always a brief moment of being invested in the heat of the real world, even if fleeting, and there is always some residual awareness that there is some 'reality' to the thing. In the case of a BP share, for example, the share has a reality based the fact that it is a legal claim upon what BP owns. It is thus directly connected to the real world outlook of those oil fields and pipelines.<br /><br />We call traders who make assessments of that reality 'fundamental traders': They might say "<i>I think OPEC is going to decrease supply and thereby boost the price of oil, and thereby boost BPs profit. I will therefore buy this BP share that allows me to benefit from any perceived increase in the value of BP’s collective assets."</i><br /><br />The actions of such fundamental traders give rise to a second-degree reality that is exploited by traders who watch the data they generate. We call this technical trading. Such traders may say "<i>Market data suggests that a lot of people are currently buying BP shares. I am going to ride with this sentiment."&nbsp;</i></div><div><br />Both of these techniques rely on a type of sentience, an awareness of some external reality and an ability to reason about it. In the case of fundamental trading, it's the awareness about some new development in the world of oil. In the case of technical trading, it's the awareness of some new trend that is developing among other traders.<br /><br />For something to contain 'meaning', in the human sense of the word, it should be something that is open to <i>human experience</i>. There are many things that are not open to human experience - for example, perceiving radio waves - and in a sense that takes them out of the realm of meaning. Sure, we can use instruments to detect radiowaves, and try make meaning out of the resultant observations, but radio waves cannot ever really mean anything to us in their raw state.<br /><br />The key thing about a radiowave though, is that it's existence does not depend upon human observation. It exists regardless of whether you can perceive it or not. <i>A share is nothing like this.</i>&nbsp;A share, by definition, is a politically constructed claim on a politically constructed company that is run by humans, doing things that are perceivable by humans. It's value does not exist outside of human assessment of how well that is being done, and there is no 'hidden reality' to a company that operates outside the realm of human experience. We cannot say something like "well, we cannot see BP, but we know it exists through experiments at <a href="https://en.wikipedia.org/wiki/CERN">CERN</a>". BP, unlike radio-waves, has no microsecond reality. In other words, <i>nothing</i> can meaningfully change in such a legally constructed entity in the imperceptible space of microseconds.<br /><br /></div><div>Thus, when you in fact do dip into the realm of microseconds, it is highly implausible that an automated trading algorithm is actually being exposed to external ‘outside information’ that has anything to do with either BPs operations, or observation of an emergent trend in people trading BP shares. At that level, all you're doing is highly precise arbitrage activities in microscopic inconsistencies in people's perceptions, or perceptions of perceptions, of reality. The activity going on at the molecular microsecond level is by definition, not about the thing being traded. The sheer emotional disconnection engendered by the technological medium, combined with the sheer speed means that this certainly cannot be thought of as trading in 'things' at all. This is the isolation of, and subsequent trading of microscopic, subconscious instability.<br /><br />It is the financialisation of meaningless noise, something that previously wasn't subjected to commodification. The algos have an internal world, like the internal world we see in those electron microscope pictures where tiny, imperceptible flakes of dust appears as a whole landscape with valleys and hills. From the perspective of an atom, that world means a lot, but from the perspective of humans, the internal contours of a speck of dust are irrelevant and meaningless. Likewise, at microsecond level, you’re trading meaninglessness.</div></div><div><br /></div><div><h3>In closing: Parasitic algorithmic surrealism</h3><div><div class="separator" style="clear: both; text-align: center;"><a href="http://www.i-sis.org.uk/graphics/SalvadorDali1.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://www.i-sis.org.uk/graphics/SalvadorDali1.jpg" height="363" width="500" /></a></div><br />One common problem in thinking about HFT, though, is that people’s minds run away with them. They feel panicked by how alien it seems, having visions of extreme market meltdown as rogue algorithms run everything in a giant psychedelic orgy of routers.<br /><br />It's worth taking a breath before stressing out too much. While it’s true that the algorithms might exist in serene, unreal bubbles, at some point they are constrained by the reality of the world. Take, for example, the Flash Crash. It was a momentary breach where rogue algorithms painted a warped picture of reality, but minutes later the real world kicked back in and the algos had their collective wills bent back. If Wallmart goes bankrupt, the value of a Wallmart share will tank, and if an algorithm says otherwise, it will be crushed by the legal reality that the shareholders of Wallmart are going to get blasted out of the water.</div><div><br /></div><div>There are probably limits on how much HFT can proliferate. I mean, a parasite relies upon an ecosystem to survive, and in the end, HFT algos have to feed off something. In this case, it’s probably the big institutional investors - the whales that make up the baseload order flow of the market - that 'host' the HFT parasite. The question is not so much whether HFTs can ‘take over’ a market, but rather whether they disrupt it, exert a new cost on it, or otherwise cause a nuisance. (of course, if you're an industry lobbyist, you might alternatively suggest that they ‘offer useful services’ and improve the ecosystem)</div><div><br />To me, though, the really interesting question about HFT is not this banal fixation on whether it disrupts markets or not. It's the cultural and political elements. It's how such a ridiculous thing can be viewed as <i>legitimate</i>. And, it's the sheer physicality of it, the fact that it appears 'ephermeral' yet relies upon huge <a href="http://motherboard.vice.com/en_uk/blog/what-high-frequency-trading-looks-and-sounds-like">real world infrastructure</a> to engage in the essentially meaningless activity. And, it is the geography. It's a technology set that attempts to eliminate distance and time, but perception of distance and time are two main components of a sense of <i>difference</i> between places. Eliminate the sense of distance and the time it takes to get there, and you can create the homogenising illusion of being in many places at once simultaneously. The computer interface at a global HFT firm, presiding over multiple global markets, is an agent of bland homogenisation.<br /><br />Above all, though, HFT is an agent of <i>financial surrealism.</i>&nbsp;We make electricity by burning real fossil fuels dredged out of the Niger Delta, and then waste that running servers doing something that cannot even be represented. Serious-faced men have serious-faced meetings about it, but they might just as well be wearing pink unicorn outfits in a Neverland dream. Seriously, WTF are you doing?<br /><br /><br /><hr /><div><h3>Further reading: People to follow for up-to-date HFT info</h3><br /><ol><li>Alexandre Laumonier (<a href="https://twitter.com/SniperInMahwah">@SniperInMahwah</a>): Website&nbsp;<a href="https://sniperinmahwah.wordpress.com/">Sniper in Mahwah</a></li><li>Eric Scott Hunsader (<a href="https://twitter.com/nanexllc">@nanexllc</a>): Website <a href="http://www.nanex.net/">Nanex</a></li><li>Sal Arnuk (<a href="https://twitter.com/ThemisSal">@ThemisSal</a>): Website <a href="http://www.themistrading.com/">Themis Trading</a></li><li>Joe Saluzzi (<a href="https://twitter.com/JoeSaluzzi">@JoeSalluzi</a>):&nbsp;Website&nbsp;<a href="http://www.themistrading.com/">Themis Trading</a></li><li>Irene Aldridge (<a href="https://twitter.com/irenealdridge">@irenealdridge</a>)</li><li>David Lauer (<a href="https://twitter.com/dlauer">@DLauer</a>)</li><li>Haim Bodek (<a href="https://twitter.com/haimbodek">@HaimBodek</a>)</li></ol></div><hr /><div style="text-align: justify;"><h3>And finally...</h3><br />These pieces take me ages to write, so if you'd like to support my ongoing Creative Commons writing, please consider buying me a&nbsp;<a href="http://suitpossum.blogspot.co.uk/p/support.html">virtual beer</a>. Cheers!</div><hr /><div style="text-align: center;"><br /></div></div></div></div></div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/dxhe1DljzSU" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com16http://suitpossum.blogspot.com/2015/06/high-frequency-trading-guide.htmltag:blogger.com,1999:blog-6454624189383327908.post-15818819444682673612015-03-27T18:54:00.003+00:002015-06-22T18:19:37.781+01:00 A dark knight is better than no knight at all: Why we need Bitcoin despite its flaws<div dir="ltr" style="text-align: left;" trbidi="on"><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="http://4.bp.blogspot.com/-_MMqd3Qff4g/VYhDn8SxqlI/AAAAAAAACmo/jJGcA-nI9xY/s1600/Chessboard%2BIllusion.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="400" src="http://4.bp.blogspot.com/-_MMqd3Qff4g/VYhDn8SxqlI/AAAAAAAACmo/jJGcA-nI9xY/s400/Chessboard%2BIllusion.jpg" width="307" /></a></div><br /><hr /><i>This essay of mine was originally published in <a href="http://kingsreview.co.uk/magazine/blog/2015/03/24/a-dark-knight-is-better-than-no-knight-at-all/">Kings Review</a>&nbsp;and is republished here under Creative Commons licence</i><br /><hr /><br />A Knight on a chessboard can be looked at from two different perspectives. Firstly, we can zoom in and analyse it in absolute terms as a closed system. What is the shape of the Knight? What capabilities does it have? What kind of language does it use to describe itself?&nbsp;</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Secondly, we can zoom out and analyse it in relative terms, like looking at a Knight in relation to the arrangement of Bishops, Pawns and Rooks on a chessboard, seeing it as but one element of a broader interactive system.&nbsp;</div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div><br /></div><div style="text-align: justify;">Likewise, Bitcoin, and other cryptocurrencies, can be seen from two broad perspectives. We can immerse ourselves in the code, in the Bitcoin community and in its rhetoric, and analyse whether these <i>internal</i> dynamics are positive or not. Or we can ignore the particularities of the code, the self-proclaimed goals of the proponents, and instead analyse Bitcoin and its connection to the rest of the monetary system, financial sector and broader societal institutions.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">I use this chessboard analogy with caution. The world is not actually a game played by different institutions with fixed characteristics like chess pieces. The analogy is useful, though, as a tool to help one see that the peculiar characteristics internal to say, a knight, really have to be perceived in light of the context that the knight finds itself in. Bitcoin does not exist in a vacuum, and as such its attributes can only express themselves within the constraints set by others on a broader metaphorical board.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">This is important because it affects the way we either praise or critique Bitcoin. Members of the Bitcoin community sometimes describe the workings of the cryptocurrency as if they imagined it on a chessboard with no other pieces, or perhaps on a chessboard made up entirely of knights. For example, despite the fact that Bitcoin has made almost no dent in central banking, someone might claim “Bitcoin is an apolitical protocol which renders central banks redundant and allows us to mutually contract with each other freely…” The statement is <a href="http://en.wikipedia.org/wiki/Prefigurative_politics">prefigurative</a>, a normative vision of an imagined future reality rather than a description of an actual current reality.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Similarly, critiques of Bitcoin might fight against this vision, or attack Bitcoin in isolation without thinking about its context. They might claim, “It is subject to abuse and <a href="http://fortune.com/2014/10/24/bitcoin-fraud-scam/">fraud</a>!”, without admitting that <i>relative</i> to the existing payments and banking system – with its routine, legitimised, large-scale social injustice committed by transnational banking behemoths – the abuses are tiny.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">It is only by zooming in and out, and considering the interplay between these absolute and relative perspectives that we can start to detect the complex power dynamics within Bitcoin. Like a country, it has<i> internal</i> power dynamics – which can be lauded or talked down – but also finds itself within a broader geopolitical situation, in which the domestic dynamics are less important. In this article, I will first sketch the internal narrative of Bitcoin empowerment, then offer four lines of critique, and then go back and suggest why, despite the critique, we should be glad Bitcoin exists.</div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">What the Knight says about itself: The narrative of personal empowerment</h3><div style="text-align: justify;"><a href="http://upload.wikimedia.org/wikipedia/commons/6/64/Chess_tile_nd.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://upload.wikimedia.org/wikipedia/commons/6/64/Chess_tile_nd.png" height="320" width="320" /></a>If you spend time at a Bitcoin event, you will hear a lot of claims being made concerning Bitcoin’s potential to create personal empowerment. These imagined benefits often include:</div><div><div><ul style="text-align: left;"><li style="text-align: justify;">Bitcoin as defence of privacy: The (semi-)anonymous nature of the transactions protects people from the prying eyes of authorities, bypassing oppressive state surveillance and corporations</li><li style="text-align: justify;">Bitcoin as protector against monetary abuse: In contrast to a central bank that can inflate away hard-earned savings, the hard-coded money supply protects people through promoting deflation</li><li style="text-align: justify;">Bitcoin as agent of creativity, excitement and self-determination: There is a certain exhilaration and even fun in using a new, experimental technology, especially when they are frowned upon by the existing (state and corporate) status quo. People often search for spaces of rebellion, and the option to challenge existing conventions in a spirit of self-determination</li><li style="text-align: justify;">Bitcoin as agent of mental expansion and open-mindedness: We have long passively accepted monetary monopolies. Bitcoin has opened up the horizon to multiple currency systems. Furthermore, the underlying <a href="http://www.e-ir.info/2014/06/01/visions-of-a-techno-leviathan-the-politics-of-the-bitcoin-blockchain/">blockchain technology</a> can be used for other, non-monetary purposes</li><li style="text-align: justify;">Bitcoin as a less costly way to transact: The current commercial bank payments system extracts rent from people in many ways. Bitcoin allows us to bypass that, achieving cheaper transactions</li><li style="text-align: justify;">Bitcoin as creator of <a href="http://www.whydev.org/3-ways-bitcoin-can-change-development/">financial inclusion</a>: Bitcoin offers a lifeline to people in countries with unstable banking systems and corrupt governments, allowing them to escape an otherwise compromised system</li></ul><div style="text-align: justify;">We have to take these claims seriously. For example, we do indeed value privacy. It allows us to do things that powerful interest groups might critique, and historically this is a very important driver of progressive change. Indeed, as books like <a href="http://www.misfiteconomy.com/">The Misfit Economy</a> point out, activities in the grey area between deviance and normality are often sources of innovation. A similar principle is even found in ecological design frameworks like<a href="http://en.wikipedia.org/wiki/Permaculture"> permaculture</a>, where value is not only placed in cultivated systems, but also in the chaotic creativity that exists on the unregulated margins.</div></div></div><div style="text-align: justify;"><br /></div><div><div style="text-align: justify;">On the other hand, each of these claims can be tested and subjected to further scrutiny. For example, is privacy really a form of empowerment by itself? Sure, it might be an element of a broader programme to give people breathing room to act independently, but privacy is equally used as a tool of elites to avoid accountability.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">And what about this story of financial inclusion? Sure, maybe Bitcoin might offer a new means to create <a href="https://www.bitpesa.co/">cheap remittance systems</a>. On the other hand, there is something tiresome about the way that Western tech optimists constantly invoke the mythical land of ‘Africa’, with the imagined African person in the imagined African village, using Bitcoin to escape corruption in their country. As a person from ‘Africa’ who has also had experience with international development, it is easy to see this technology-centric narrative is both patronising and, to be frank, delusional.<br /><br /><h3>Tech critique 1: Individual empowerment, or collective empowerment?</h3><div class="separator" style="clear: both; text-align: center;"><a href="http://www.lazinc.com/content/images/art/3d/2013/original/freedom-for-the-pike-6798.jpg?280-crop" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://www.lazinc.com/content/images/art/3d/2013/original/freedom-for-the-pike-6798.jpg?280-crop" height="400" width="400" /></a></div><br />But, even if we take these claims at face value, and assume Bitcoin<i> does</i> have the potential to create personal empowerment, a second question remains: Does this necessarily translate into broader <i>social empowermen</i>t?<br /><br />Within the Bitcoin community – which has a distinct libertarian bias – there often seems to be the assumption that personal empowerment is roughly the same thing as broader social empowerment. There is bias towards believing that if a tool allows a person to protect themselves individually, it must also be positive at a collective level.<br /><br />To illustrate this point using a different example, consider a basic pro-gun narrative you might encounter: <i>this rifle can be used to protect me, and therefore it is a protector of rights, and thus a tool for broader social empowerment</i>.<br /><br />This approach – which starts from a defensive, individualistic perspective and then justifies it with an appeal to a secondary benefit that apparently accrues to everyone else – can be contrasted to arguments looking at the societal perspective first. In the case of rifles, we could also start from an assertion that <i>collectively</i>, gun violence harms society, and proceed from there to conclude that <i>individual</i> gun use should be restricted.<br /><br />This problematic dynamic can be seen in the Bitcoin claim about deflation as a form of protection. While it is true that from the perspective of an <i>individual</i> person, deflation appears to empower them (in that the money-claims they hold miraculously become worth more relative to goods), deflation at a societal level can just mean that those who hold savings, or who hold (i.e. own) debt instruments, benefit relative to those who do not (and owe debts to others). Both inflation and deflation represent different forms of wealth transfer, and there is nothing intrinsically empowering or disempowering about either of them. It really just depends on <a href="http://krugman.blogs.nytimes.com/2010/08/02/why-is-deflation-bad/">who you are</a>.<br /><br />Deflation—in a crude sense—means work someone did (abstractly represented in a money claim) will be valued more than work they get back from someone else later (claimed with that money). Inflation means work they did will be valued less than work they get back from someone else.<br /><br />Thus, as economist <a href="https://vimeo.com/90733688">Beat Weber</a> points out, the idea that deflation protects’you is what might be called an Uncle Scrooge perspective, in that it most appeals to people with monetary savings who are concerned about the state ‘inflating money away’. It is the conservative impulse of a creditor, or perhaps like that of a squirrel hoarding apparently scarce claims to nuts, a situation that may leave the individual squirrel empowered, but that collectively locks squirreldom into a destructive game.<br /><br />The important point here, though, is not to prove whether inflation or deflation is preferable. It is rather to point out that it is not <i>obvious</i> that deflation is somehow better than inflation, and anybody who presents it as such is clearly taking a very partial view. Indeed, stop for a moment and think about what deflation means from an <i>intergenerational</i> perspective. While right now, Bitcoin inequality is justified in terms of early adopters being rewarded relative to late adopters, this later would turn into a battle between current generations who hold the limited currency, versus yet unborn generations who will be forced to earn it (or buy it) from them by providing services far in excess of what was required to originally obtain the currency.<br /><br /><hr />Mid article message! Grab a pirated version of me book <i>The Heretic's Guide to Global Finance: Hacking the Future of Money</i>&nbsp;<a href="http://suitpossum.blogspot.co.uk/2015/02/heretics-guide-global-finance-pdf.html">here</a><br /><hr /><br /><h3>Tech critique 2: Tools of empowerment are most easily appropriated by the already-empowered</h3><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://ocean.otr.usm.edu/~w301497/teaching/geography_lounge/topics/economic/world-is-spiky.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://ocean.otr.usm.edu/~w301497/teaching/geography_lounge/topics/economic/world-is-spiky.jpg" height="262" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">THE WORLD AIN'T FLAT: IT'S SPIKEY</td></tr></tbody></table><br />The individualistic bias sometimes found in the Bitcoin community can prioritise awareness of individual benefits over collective benefits. Empowerment, in turn, is often seen to stem from the individual not being interfered with, encapsulated in slogans like ‘don’t tell me what to do’, and ‘just leave me alone’.<br /><br />The problem, though, is that Bitcoin finds itself in a <i>de facto</i> unequal world, and it just so happens that “don’t tell me what to do” and “just leave me alone” are, perhaps co-incidentally, the same things that powerful people—like &nbsp;the freedom-loving <a href="http://www.rollingstone.com/politics/news/inside-the-koch-brothers-toxic-empire-20140924">Koch Brothers</a>—say to prevent forms of monitoring or regulation of their giant secretive global businesses that impact upon the lives of many people with less economic clout. We have reasonable grounds to be sceptical about this.<br /><br />You do not have to be a conspiracy theorist to realise that the people with the most ability to exploit Bitcoin (to start new companies, to get access to investment capital to develop the technology) also happen to be the same people who already are doing pretty well in society. Thus, even if the technology itself might have positive principles, access to it—whether that is explicit or implicit—is &nbsp;unequal.<br /><br />We see this issue cropping up in <a href="http://suitpossum.blogspot.co.uk/2014/01/crypto-patriarchy-problem-of-bitcoins.html">gender critiques</a> of Bitcoin, analysis of Bitcoin <a href="http://www.rollingstone.com/politics/news/inside-the-koch-brothers-toxic-empire-20140924">inequality</a>, and critiques of the cult of meritocratic technocracy, the fact that programmers are not just your average Joe but a particular technological priesthood wielding a language that many do not understand. Indeed, the Bitcoin community, just like the mainstream finance community, has arguably developed its own exclusionary language and culture.<br /><br />Analysing power and privilege like this is not rocket science. It operates on a few lines, such as 1) gender 2) race and ethnicity 3) age 4) socio-economic situation and education levels and 5) position in the geopolitical system. So, lo and behold, a middle-aged upper-class university-educated man from America tends to wield much greater power, have much greater access to goods and services, and perceive the world as much flatter, than, say, a young impoverished woman from Nepal. Their ability to enthusiastically adopt an otherwise neutral technology is likewise, much greater.<br /><br />Certainly, some Bitcoin proponents can get very irritated when you draw attention to the subtle inequalities. It is like they perceive it as an irrelevant point, like the person is thinking “I have access, so everyone else obviously does too”, and “nobody is stopping you using it, therefore it is free”. They prefer to imagine that the only barrier to a utopian world comes in the form of external and unnatural aggressors like the government, corporate cronies and central banks. They themselves form no part of such a power structure.<br /><br />Thus we find Silicon Valley tech entrepreneurs brimming with optimistic expectations of disruption and future success, proclaiming the word of blockchain rebellion as a universal tool of empowerment for all, contrasting themselves to the parasitic Wall Street banker. The critical observer, though, might just take a step back, and conclude that this is really just <i>one group of elites fighting another group of elites for control of the ramparts of power, both invoking the interests of Average Joe in the process.</i><br /><br />At a recent Bitcoin meetup, Vinay Gupta of <a href="https://www.ethereum.org/">Ethereum</a>&nbsp;referred to a brilliant video that encapsulated this very point. It was Juice Rap News’ <a href="https://www.youtube.com/watch?v=W4nSjPdT788">New World Order video</a>, where a guy blames the world’s problems on a nefarious New World Order. He is subsequently shown that the NWO is a mental construct he uses as a tool to cast himself in the role of an underdog, to justify his own position of power within a greater system that he refuses to acknowledge.<br /><br />It is an authentically disturbing line of critique, and one to take seriously. Despite the rhetoric of empowerment and rebellion, there is too often an inability of those articulating that rhetoric to comprehend their own position in a system. Their vision of Bitcoin as a neutral apolitical technology to be used by people to bring liberation to the world is not a reflection of reality. It is a reflection of the fact that they wield enough power to fail to perceive the inbuilt barriers to its usage.<br /><br /><h3>Tech critique 3: Even if access is equal, technology can be abused by people</h3><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://www.endofthreefitness.com/wp-content/uploads/2012/06/Abraham-Lincoln-Vampire-Hunter-20.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://www.endofthreefitness.com/wp-content/uploads/2012/06/Abraham-Lincoln-Vampire-Hunter-20.jpg" height="332" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">TECHNOLOGICAL AMBIGUITY</td></tr></tbody></table><br />Perhaps the most well-established line of technological critique is the simple observation that technology can be abused: <i>You can use this axe to chop firewood, but you can also use it to cut my head off. </i>This is clearly a different line of critique to saying that access to axes, or encouragement to use axes, or education on axe use, is unequal.<br /><br />Bitcoin, like many other technologies, can be overtly abused by people. This is something that keeps cropping up in the news, with stories of various forms of <a href="http://www.reuters.com/article/2015/02/10/us-bitcoin-hongkong-idUSKBN0LE09A20150210">fraud, scams and hacks</a> within the Bitcoin ecosystem. These scams, furthermore, are most likely to hit people who are already in a disempowered situation, such as those who are in debt and who are desperate for a quick way out.<br /><br />The volatile and speculative nature of Bitcoin trading, like that of financial day trading, online poker, lotteries, and win-a-car competitions, can be twisted into a story of empowering escape from economic reality. This can also have a parasitic class element to it, as venture capitalists and technological elites push get-rich-quick narratives to the working man in the pub, claiming to be on the same side.<br /><br />Of course, merely pointing out that a technology can be abused is not that interesting. Your cash can be robbed from your wallet, but we do not use this fact as an argument for banning the institution of banknotes.<br /><br />A more compelling subsection of this critique is not so much concerned with current abuse of the technology. Rather, it concerns the increasing control certain individuals have over it, and how this in turn opens up the scope for large-scale future exploitation. For example, we might consider the growing power of <a href="http://www.coindesk.com/research-tracks-bitcoin-mining-growth-from-hobby-to-big-business/">mining pools</a>, which increasingly have a domineering position within the network.<br /><br />These Bitcoin corporations are emerging because there are centralising tendencies <i>internal</i> to Bitcoin’s design. Miners are rewarded with new bitcoins for processing transactions and securing the network, but because the issuance of new bitcoins occurs at a fixed rate, regardless of how many people are mining, the more miners there are on the network the less the individual miner is likely to get. This means that to compete the individual miner must either obtain increasingly powerful computers, or band together with others to create collective corporations with enough processing power to compete. Unlike in some industries, there are <a href="http://www.newrepublic.com/article/121089/how-small-bitcoin-miners-lose-crypto-currency-boom-bust-cycle">no advantages</a> to being a small nimble operation. Sheer brute force is really the only competitive edge, and that requires access to capital.<br /><br />Where does this lead us? The future of Bitcoin could be one of passive users relying on huge mining pools, essentially corporate players, to run the network. Such an outcome would leave it not that far at all from our current bank-centred payments system.<br /><br /><br /><hr /><i>Quick message: I don't get paid for Creative Commons pieces like this, so if you're enjoying it, please consider <a href="http://suitpossum.blogspot.co.uk/p/support.html">donating to me</a> a virtual beer</i><br /><hr /><br /><h3>Tech critique 4: The Techno-Leviathan</h3><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://mythlovestories.com/echo04L.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://mythlovestories.com/echo04L.jpg" height="300" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">NEUTRAL TECHNOLOGY?</td></tr></tbody></table><div><br /></div>The three aforementioned critiques add up to a simple conclusion: there is unequal access to a technology that can also be abused by those who use it, and that may fail to deliver the collective benefits that some claim it would. People are used to such observations about technology. It is like pointing out that a pen can be used to write inspiring masterpieces as well as hate speech, in a society where only some people can read and write.<br /><br />But what about the power dynamics built into the technology itself? What about the way the act of writing with a pen makes you think? This line of technological critique is not nearly as familiar as the normal ‘people can abuse technology’, or ‘there is unequal access to technology’ lines. This is the idea that <i>the technology, in itself and regardless of other people, is not neutral</i>. It is the kind of critique associated with people like Marshall McCluhan. A technology like a TV might show different content—government propaganda, Fox News, or a National Geographic documentary—but conceals an invisible power dynamic that is there regardless of the content. <i>The fact that you are passively sitting there giving it energy</i>. Are you aware of the attention that you have deferred to the machine?<br /><br />I want to challenge the notion, pervasive in some parts of the Bitcoin community, that technology itself is <i>apolitical, </i>and it’s with this in mind that I came up with the concept of the <i>Techno-Leviathan</i>, originally sketched out in my article <a href="http://www.e-ir.info/2014/06/01/visions-of-a-techno-leviathan-the-politics-of-the-bitcoin-blockchain/">Visions of a Techno-Leviathan: The Politics of the Bitcoin Blockchain</a>.&nbsp;The essence of the concept is this: technological infrastructures do not offer an escape from government, they just offer another, competing, governance system with its own power dynamics. You can decide to view rule by algorithms as a positive or negative thing, but the point is to recognise the power that is being given to the apparently neutral technology.<br /><br />One way to conceptualise this is to think of mirrors. Can you see a mirror? Sure, you can see an image in a mirror, but try see the <i>mirror itself</i>. It is almost invisible behind the projected image. Likewise, people see all sorts of visions in the blockchain, visions of human freedom and epic escape, but they struggle to see the thing it is reflected in, and that thing is the internet monarch, the Techno-Leviathan. It is like reflective glass. And, like Narcissus, you should be careful about falling in love with the reflection in the mirror, because it obscures the fact that it is then the mirror itself that controls you.<br /><br />Perhaps this is unnecessarily dramatic. A concept like the Techno-Leviathan is, mostly, derived by an internal reading of Bitcoin, in an imagined world where no other system exists. Yes, indeed, if blockchain technologies were to become pervasive, then this Techno-Leviathan would emerge. But, the reality of the world right now is that we’re nowhere close to that situation.<br /><br /><h3>Back to the chessboard: The geo(electric) politics of a cashless future</h3><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://www.techgoondu.com/wp-content/uploads/2014/10/0003956a3ec581caef1f1f10f0b6fdc5-600x391.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://www.techgoondu.com/wp-content/uploads/2014/10/0003956a3ec581caef1f1f10f0b6fdc5-600x391.png" height="260" width="400" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">PLEASE KEEP YOUR ID CARD ON YOU AT ALL TIMES</td></tr></tbody></table><br />So let’s take a step back now, and zoom out to a bird’s-eye view of the chessboard. While the critically minded individual might take pleasure in deconstructing the narrative put out by the Knight on the chessboard, remember that the cryptocurrency remains a very small part of an overall system that is much more destructive.<br /><br />The reality of our current world is that regardless of the rhetoric—conservative libertarian, left-wing anarchist, or otherwise—of the Bitcoin community, the mainstream financial sector is infinitely more powerful, much bigger, and has much more political clout. In fact, there is not even yet a real financial system that exists for Bitcoin. There are no banks for it, or official systems of lending, or real negotiable financial instruments denominated in it.<br /><br />From this perspective, we do not actually have to care about whether or not Bitcoin’s hardcoded monetary policy is positive or not, or whether the evangelists are full of nonsense. From a strategic meta-level perspective, we might merely see Bitcoin as a potential future <i>counterpower</i> to the existing, and much more powerful, bank payment system. It does not necessarily matter if that counterpower happens to have some internal negative characteristics. What is important is that it is a counterpower.<br /><br />This is especially important in the context of a growing move to a <i>cashless society</i>. The payments space is currently gurgling with excitement about contactless technology and micropayments, the increasing ability to use cards to pay for almost everything. Companies like Paypal, Stripe, Square and Venmo have the gloss of disruptive innovation, but all the start-ups and technological advances are built on one foundation: The commercial banks that act in concert with credit card networks like Mastercard and Visa.<br /><br />Regardless of which efficient payments provider you use, whether it is ApplePay or Google, in the end they all rely on the same commercial banking payments infrastructure. And that is because the entire electronic money supply—that the payment system is supposed to move around—is created by commercial banks and does not exist without them.<br /><br />If that comes as a surprise, it is <a href="http://suitpossum.blogspot.co.uk/2015/01/three-money-myths.html">worth noting</a> that not one unit of electronic currency that you use comes from the central bank. Indeed, the only government money we <i>directly</i> use are coins and banknotes, otherwise known as central bank notes. An imagined cashless future, in which we move away from use of such notes, is basically one where all transactions must occur via commercial banks, who in turn deal with each other via the central bank.<br /><br />And this means that every single one of your transactions becomes a potential &nbsp;piece of data to be monitored, incrementally building up a database of your personal characteristics so vast that even Facebook would be jealous (actually, have you considered why Facebook is trying to get into the <a href="http://www.theguardian.com/technology/2014/oct/06/facebook-mobile-payments-messenger-app">payments game</a>?). And with the correct big data methodologies to make sense of it, such data becomes hot property.<br /><br />Some might react to this with indifference, saying “I’ve got nothing to hide, and contactless payment is so convenient”. Those who express doubt about cashless society are cast as either Luddites or criminals, trying to remain in the backward shadows.<br /><br />This narrative needs to be countered. I am not a privacy fetishist, but I do know that it is essential for the sense of mental freedom it gives us. Without the occasionally ability to be invisible, society takes on the feeling of a <a href="http://en.wikipedia.org/wiki/Panopticon">panopticon</a>, and that itself breeds distrust. You need the ability to feel alone—like that feeling of sitting alone in a bath, at peace with all your vulnerabilities—in order to value the presence of others.<br /><br />A very small amount of our overall transaction volume is currently undertaken with coins, but coins are important precisely because they give us that little passageway of flexibility and anonymity. They give the ability to flick a tip and a smile to a busker as we pass them in the street, a personal gesture that is unmediated and unverified and unmonitored.<br /><br />In a potential future world where such physical tokens disappear, I want Bitcoin to exist. I want something that feels roughly like electronic cash, something that can exist as a marginal counterpower outside the walled gardens of mainstream payments.<br /><br />And like coins, I expect Bitcoin will never become a dominant payment system. I expect it will, at most, account for 1 per cent of transactions. But that is fine. 1 per cent privacy is going to be a lifeline in any future world of 99 per cent bank surveillance.<br /><br /><br /><hr /><h3>If you enjoyed this...</h3><br /><ul><li>Further reading: Check out my piece <a href="http://suitpossum.blogspot.co.uk/2014/06/techno-leviathan-bitcoin-politics.html">Visions of a Techno-Leviathan: The Politics of the Bitcoin Blockchain</a></li><li>Flip me a <a href="http://suitpossum.blogspot.co.uk/p/support.html">small donation</a>&nbsp;- even £2.50 goes a long way</li><li>And as a bonus, grab a copy of my book... now in <a href="http://suitpossum.blogspot.co.uk/2015/02/heretics-guide-global-finance-pdf.html">pirate format</a></li></ul><br /><br /></div></div></div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/QO_9LpQP_aA" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com1http://suitpossum.blogspot.com/2015/03/bitcoin-power-dynamics.htmltag:blogger.com,1999:blog-6454624189383327908.post-55819740509295634942015-02-03T22:23:00.000+00:002015-04-22T15:12:59.084+01:00Catch it while you can! Rogue PDF copy of The Heretic's Guide to Global Finance is on the loose<div dir="ltr" style="text-align: left;" trbidi="on"><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="http://4.bp.blogspot.com/-VqjhbNwWfPY/VND13WHj8mI/AAAAAAAACU8/vap2BSMt0Og/s1600/HereticPirate2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://4.bp.blogspot.com/-VqjhbNwWfPY/VND13WHj8mI/AAAAAAAACU8/vap2BSMt0Og/s1600/HereticPirate2.png" height="375" width="500" /></a></div><br /><h3 style="text-align: left;">Ahoy, it's been pirated!</h3><div><div style="text-align: justify;">My 2013 book - the <i><a href="http://suitpossum.blogspot.co.uk/p/the-heretics-guide.html">Heretic's Guide to Global Finance: Hacking the Future of Money</a> -</i>&nbsp;has found its way onto <a href="http://aaaaarg.org/thing/5344505b334fe00789216125">Aaaaarg.org</a>, and also onto a Belgian activist's&nbsp;<a href="http://bit.ly/HereticsGuide">dropbox</a>, where it is easily downloadable (she was kind enough to send me an email saying that she was "sad to know that it is not being distributed under an open license, since it would benefit many people who cannot afford to buy it").<br /><br />I'm not against pirating, provided it's going to help humanity, and I hope my book can do that in some small way. I can't speak for my publishers Pluto Press, but they are swashbucklers who publish the likes of Chomsky, so I'm sure they're not surprised. Besides, the book is about <i>HACKING THE GLOBAL FINANCIAL SECTOR!</i>&nbsp;so screw it, let's let it circulate globally! For those who don't know, it's endorsed by Cambridge economics professor Ha-Joon Chang and Bill McKibben of 350.org and has received some great reviews (check out&nbsp;<a href="http://www.goodreads.com/book/show/17368973-the-heretic-s-guide-to-global-finance">GoodReads reviews here</a>&nbsp;and&nbsp;<a href="http://www.amazon.co.uk/The-Heretics-Guide-Global-Finance/dp/0745333508#customerReviews">Amazon reviews here</a>). You can see details, endorsements and reviews on <a href="http://suitpossum.blogspot.co.uk/p/the-heretics-guide.html">this page</a>.</div><br /><h3 style="text-align: left;">If you take it for free though, please share it too</h3></div><div><div style="text-align: justify;">Look, it's obviously a lot of work to write books like this, and I almost bankrupted myself with the energy I put in. So, if you'd like to use the pirated version, please consider the spirit of open culture, and&nbsp;<i>share it with at least one other person </i>so&nbsp;that it can travel far and wide<i>. </i>Ideally&nbsp;share it with 3 people, especially those who do not have enough to buy the <a href="http://www.amazon.co.uk/The-Heretics-Guide-Global-Finance/dp/0745333508">print version</a>. (you can <a href="https://www.blogger.com/email-post.g?blogID=6454624189383327908&amp;postID=5581974050929563494">email from here</a>)<br /><br /><h3>Also, if you've got £1, please consider flipping me a donation&nbsp;</h3>As mentioned in my&nbsp;<a href="http://suitpossum.blogspot.co.uk/p/support.html">support page</a>, I love&nbsp;producing new ideas for how to rewire the financial system, and like to stay independent whilst doing that. You can use the Paypal button below&nbsp;to donate me a <b>loaf of bread</b>&nbsp;(<i>£1.50)</i> if you're a student, unemployed or suffering cash flow problems, or <b>a small beer</b>&nbsp;(<i>£3)</i>&nbsp;if you're fully employed and have a pension. This all adds up and can really help me to stay independent.<br /><br /></div></div><div><div><div align="justify"><form action="https://www.paypal.com/cgi-bin/webscr" method="post" target="_top"><input name="cmd" type="hidden" value="_s-xclick" /><input name="hosted_button_id" type="hidden" value="MTU3B48CEAPJ8" /><input alt="PayPal – The safer, easier way to pay online." border="0" name="submit" src="https://www.paypalobjects.com/en_US/GB/i/btn/btn_donateCC_LG.gif" type="image" /><img alt="" border="0" height="1" src="https://www.paypalobjects.com/en_GB/i/scr/pixel.gif" width="1" /></form><br /><h3>Finally, please send me feedback!</h3><div>I'm not one of those people who claims to know everything that is wrong with the world and how to fix it. Shifting the destructive tendencies of the financial sector and harnessing it towards positive ends is a work in progress, and one that takes many perspectives. If you think I've missed something out, or have ideas and projects you think I should consider, please send me an email (see side panel) and tell me! Hope you enjoy ;)<br /><br /></div><h3>Adios amigos!</h3><div><br /></div></div></div></div></div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/2-QRlG1_gAY" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com0http://suitpossum.blogspot.com/2015/02/heretics-guide-global-finance-pdf.htmltag:blogger.com,1999:blog-6454624189383327908.post-48743212842227003902015-01-10T14:31:00.000+00:002015-01-10T14:36:01.252+00:00Show me the real money: Three monetary myths that need busting<div dir="ltr" style="text-align: left;" trbidi="on"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://pmcdeadline2.files.wordpress.com/2013/12/hobbit-desolation-of-smaug-dragon-5534-hd-widescreen-wallpapers__131222195137.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://pmcdeadline2.files.wordpress.com/2013/12/hobbit-desolation-of-smaug-dragon-5534-hd-widescreen-wallpapers__131222195137.jpg" height="280" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">CENTRAL BANK?</td></tr></tbody></table><hr /><i>This article originally appeared in the December edition of Penguin's <a href="http://news.penguin.co.uk/q/13Vt5fKdDLVbnZbIfkkWp/wv">ThinkSmarter Newsletter</a>.</i><br /><hr /><br /><div style="text-align: justify;">Money pervades our everyday economic interactions. But, despite its importance, it is also pervasively misunderstood. Here are three common monetary myths – frequently perpetuated by economists – that need challenging.</div><div style="text-align: justify;"><br /></div><h3 style="text-align: left;">Myth 1: Money emerges from barter</h3><div class="separator" style="clear: both; text-align: center;"></div><div style="text-align: justify;">Economists often tell a tale about how old communities first used barter to exchange goods and services. Bartering throws up tricky situations. Take as an example a farmer trying to exchange a cow for bread from a baker, a clumsy and difficult negotiation. Thus, according the old economists like Adam Smith, money was supposedly 'invented' as a way to get around that inefficiency and confusion.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">This narrative is ahistorical and inaccurate. Anthropologists have long had a much more convincing account: in small communities without money, exchange does not take place through on-the-spot barter. Rather it takes place through <i>reciprocity</i>, the process whereby I give you something now, and then you return the favour over time. In essence, communities develop elaborate systems of score-keeping – informal ‘mutual credit’ systems are created, and if I don’t eventually honour my obligations under that system, I will be shunned from the community.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">It is these ‘I owe you one’ systems that are behind the origins of money. Money is an abstracted form of such credit, taken out of the interpersonal context of a small community, and formalised and legalised within a political system.</div><div style="text-align: justify;"><br /><br /></div><h3 style="text-align: left;">Myth 2: Money is a commodity, and a store of value</h3><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div style="text-align: justify;">Money is commonly defined as a store of value, a means of exchange, and a unit of account. But if we break it down, we see that money alone does not store value – whatever form that money takes.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Compare a £5 note, £5 worth of coins, and an internet banking screen saying you have £5 in your account. The same concept of £5 can be expressed in paper, metal or electronic form. There is nothing about the physical state of the money that carries the value. Instead, the value is held in the collective agreement of a community to honour what the money stands for.</div><div style="text-align: justify;"><br />There have been many cases where that agreement breaks down, for example, in Zimbabwe. In 2008 there was ‘hyperinflation’, a phenomenon where people lose belief in the money. As that belief disappeared, so too did the value of the money, and Zimbabwe was forced to abandon their national currency. The money itself is not the store of value. The community that agrees to uphold money is the store of value.<br /><br /></div><div style="text-align: justify;">Nevertheless, people still cling to the notion that money is a ‘thing’ that has an independent existence that we can identify, like oil or rocks. This is the commodity illusion of credit money. Money is in fact a socially constructed, and politically backed, claim on goods and services. While it may have a physical manifestation, it could also exist purely as an accounting entry.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Imagine doing 5 hours of work for a community, and in return getting given a credit for 5 hours, which is simply written down on a central list that everyone can see, saying ‘We acknowledge you did 5 hours of work, and now you can claim back 5 hours from the rest of the community’.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Now imagine tearing that entry for 5 hour credits off the central list, and shaping it into a rectangle piece of paper – like a voucher – that you can pass around to people. That’s pretty much what paper money is right?</div><br /><br /><h3 style="text-align: left;">Myth 3: Modern money is created by central banks</h3><div style="text-align: justify;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://d.ibtimes.co.uk/en/full/1358773/canary-wharf-night.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://d.ibtimes.co.uk/en/full/1358773/canary-wharf-night.jpg" height="332" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">THE REAL MONEY PRINTERS</td></tr></tbody></table>If you ask many people who creates the money we use, most people say that it's down to the central bank. In reality, the central bank creates only a small percentage of the money we use. The majority is created by commercial banks, via a process called fractional reserve banking, in which they issue IOUs against central bank money. Nowadays these IOUs are electronic, and we use them every time we use internet banking or a debit card.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">This means that if you bank with HSBC, your money actually takes the form of HSBC electronic IOUs which exist nowhere else but in HSBC’s IT system. That’s what you use when you pay with a card in a shop. This act of ‘moving’ your digital money is really just one bank telling another bank to change a data entry in their IT system. The central bank exists to back up trust in the system, and attempts to influence the private issuance of electronic money by commercial banks, but it doesn’t control the money supply itself.<br /><br /><br /></div><div style="text-align: justify;"><h3>Some further reading</h3><div>If these topics interest you, you might want to take a look at my piece&nbsp;<a href="http://suitpossum.blogspot.co.uk/2014/07/understand-money.html">Breaching the monetary Matrix: Five exercises to help you understand money</a>, and my essay&nbsp;<a href="http://aeon.co/magazine/society/so-you-want-to-invent-your-own-currency/">Riches Beyond Belief</a>. You might also consider taking a look at David Graeber's <i><a href="https://libcom.org/files/__Debt__The_First_5_000_Years.pdf">Debt: The First 5000 Years</a>, </i>Felix Martin's <i><a href="http://www.goodreads.com/book/show/17307317-money">Money: The&nbsp;Unauthorised&nbsp;Biography</a>, </i>and Nigel Dodd's <i><a href="http://press.princeton.edu/titles/10319.html">The Social Life of Money</a></i>.</div><div><br /><hr /><h3>If you enjoyed reading this...</h3></div><div>I don't get paid to produce most of these pieces, so any support is much appreciated. Here are three things you might do:</div><div><ol><li>Buy me a <a href="http://suitpossum.blogspot.co.uk/p/support.html">virtual beer</a>&nbsp;using electronic money</li><li>Share it on Twitter, or on Reddit</li><li>Email it to one person who might find it useful</li></ol><div>Cheers!</div></div></div></div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/PY1d690ZiSc" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com4http://suitpossum.blogspot.com/2015/01/three-money-myths.htmltag:blogger.com,1999:blog-6454624189383327908.post-74101914582144667232014-12-30T15:28:00.001+00:002016-01-13T13:00:30.779+00:00Peer-to-Peer Review: The State of Academic Bitcoin Research 2014<div dir="ltr" style="text-align: left;" trbidi="on"><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://i.imgur.com/U5shjgJ.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://i.imgur.com/U5shjgJ.jpg" height="400" width="400" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><b>PHILOSORAPTOR'S RESEARCH, SOON APPEARING IN <i>ECONOMETRICA</i> JOURNAL</b></td></tr></tbody></table><hr /><i>Please note: An updated <a href="http://suitpossum.blogspot.co.uk/2016/01/bitcoin-research-2015.html">Peer-to-Peer Review 2015</a> is now available</i><br /><hr /><div style="text-align: justify;">I decided to build a rather large database of <a href="https://docs.google.com/spreadsheets/d/1VaWhbAj7hWNdiE73P-W-wrl5a0WNgzjofmZXe0Rh5sg/edit?usp=sharing">academic research on Bitcoin</a>.&nbsp;If you'd like to see it, click on the link. It's a Google Doc, and it allows you to comment if you think there is something I've missed. You can also download it as an Excel spreadsheet. It includes academic, and quasi-academic, research papers, journal articles and theses related to Bitcoin.</div><div style="text-align: justify;"><br />Admittedly, the definition of 'academic' or 'quasi-academic' is pretty loose. It can include peer-reviewed papers that appear in major journals, to working papers released from university departments and think tanks, to a thesis of a PhD student, to independent research from people with clear expertise.<br /><br /></div><div style="text-align: justify;">I built this list because I myself like to write <a href="http://www.e-ir.info/2014/06/01/visions-of-a-techno-leviathan-the-politics-of-the-bitcoin-blockchain/">quasi-academic articles on Bitcoin</a>, and have been trying to find good quality analysis of cryptocurrency, frustrated by the huge amounts of spurious opinion churned in the media, and self-promoting rants by opportunists and ideologues.</div><br /><h3 style="text-align: left;"><b>How I built it: Lots of searching</b></h3><div style="text-align: justify;">To build this list, I spent about four days going through different academic search engines. Many of these search facilities found the same papers, but each also tended to find some unique articles that the others didn't. The sites include:</div><ul style="text-align: left;"><li style="text-align: justify;">JSTOR (<a href="http://www.jstor.org/action/doBasicSearch?Query=Bitcoin&amp;acc=off&amp;wc=on&amp;fc=off">here</a>)</li><li style="text-align: justify;">ScienceDirect (<a href="http://www.sciencedirect.com/science?_ob=ArticleListURL&amp;_method=list&amp;_ArticleListID=-705468727&amp;_sort=r&amp;_st=13&amp;view=c&amp;md5=a8255574f28dc9b7acc8719bb879ab01&amp;searchtype=a">here</a>)</li><li style="text-align: justify;">IngentaConnect (<a href="http://www.ingentaconnect.com/search?form_name=quicksearch&amp;ie=%E0%A5%B0&amp;option1=tka&amp;value1=bitcoin">here</a>)</li><li style="text-align: justify;">Microsoft Academic Search (<a href="http://academic.research.microsoft.com/Search?query=bitcoin">here</a>)</li><li style="text-align: justify;">SpringerLink (<a href="http://link.springer.com/search?query=Bitcoin">here</a>)</li><li style="text-align: justify;">SSRN (<a href="http://papers.ssrn.com/sol3/DisplayAbstractSearch.cfm">here</a>)</li><li style="text-align: justify;">Taylor &amp; Francis (<a href="http://www.tandfonline.com/action/doSearch?AllField=bitcoin">here</a>)</li><li style="text-align: justify;">Google Scholar (<a href="http://scholar.google.co.uk/scholar?hl=en&amp;q=Bitcoin&amp;btnG=&amp;as_sdt=1%2C5&amp;as_sdtp=">here</a>) (including year-by-year search from 2008)</li><li style="text-align: justify;">Wiley Online Library (<a href="http://onlinelibrary.wiley.com/advanced/search/results">here</a>)</li><li style="text-align: justify;">Directory of Open Access Journals (<a href="http://doaj.org/search?source={%22query%22:{%22query_string%22:{%22query%22:%22bitcoin%22,%22default_operator%22:%22AND%22}}}#.VKFxoF4h3A">here</a>)</li><li style="text-align: justify;">DiVA-portal (<a href="http://www.diva-portal.org/smash/resultList.jsf?dswid=-915&amp;language=en&amp;searchType=SIMPLE&amp;query=bitcoin">here</a>)</li><li style="text-align: justify;">Econpapers (<a href="http://econpapers.repec.org/scripts/search/search.asp?ft=bitcoin">here</a>)</li><li style="text-align: justify;">ArXiv (<a href="http://arxiv.org/find/all/1/all:+bitcoin/0/1/0/all/0/1">here</a>)</li><li style="text-align: justify;">IDEAS (<a href="https://ideas.repec.org/cgi-bin/htsearch?q=bitcoin">here</a>)</li><li style="text-align: justify;">Oxford Journals (<a href="http://www.oxfordjournals.org/en/">here</a>)</li><li style="text-align: justify;">Cambridge Journals (<a href="http://journals.cambridge.org/action/login">here</a>)</li></ul><div style="text-align: justify;"><br /></div><h3 style="text-align: left;">Open access vs. closed: A bit of both</h3><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="http://iloveopenaccess.org/wp-content/uploads/2013/03/oa-badge-2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://iloveopenaccess.org/wp-content/uploads/2013/03/oa-badge-2.png" height="189" width="200" /></a></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">A lot of the papers in the list are open access, which means you can get them as PDFs or HTML files. Unfortunately though, the top journals tend to be behind corporate-controlled paywalls and require university subscriptions or money to get in. That said, if a paper is closed access, search for it online and you'll often find earlier PDF versions of it floating about, because the authors often publish draft versions or working papers in open access formats before getting them accepted into closed journals.</div><br /><br /><h3 style="text-align: left;">Language: English</h3><div><div style="text-align: justify;">I'm not one of those people who is oblivious to the fact that research exists outside the English language, and I know that it's quite possible that some of the most cutting edge Bitcoin research could be going on in a Chinese university or in a Greek think-tank. Unfortunately I don't speak those languages, so be aware that these are only English language papers.</div></div><div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div></div><h3 style="text-align: left;"><b>Quantity of research: Reasonable</b></h3><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://thatcleverchick.files.wordpress.com/2012/01/man_looking_at_stack_of_papers.jpeg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://thatcleverchick.files.wordpress.com/2012/01/man_looking_at_stack_of_papers.jpeg" height="310" width="400" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">A LOT, BUT NOT THAT MUCH</td></tr></tbody></table><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Bitcoin literature is very new. The first paper - Satoshi Nakamoto's paper - came out only in 2008. I could find almost no academic research from 2009 and 2010, and only a trickle in 2011. It's only in 2012 that we start to find a decent amount emerging in the record. It's really in 2013 though, that the big research starts to come. 2014 has by far the most research, and it's in this year that peer-reviewed academic journal articles start to come out.<br /><br />Bear in mind that peer-review processes for big journals can take years, so it's little surprise that there are so few cryptocurrency articles out in the really big-hitter journals. My prediction for 2015 though, is that there will be a big flood of research, and a significant batch of peer-reviewed journal articles. Good research takes a while to do, especially in the social sciences.</div><div style="text-align: justify;"><br /><br /></div><h3 style="text-align: left;"><b>Quality of research: Hmm...&nbsp;</b></h3><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://dsq-sds.org/article/viewFile/3441/3201/7284" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://dsq-sds.org/article/viewFile/3441/3201/7284" height="195" width="200" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><br /></td></tr></tbody></table><div style="text-align: justify;">Quality to some extent is in the eye of the beholder, but I'll be honest - there is a fair amount of crap research out there. For example, I've found 'academic' analyses of Bitcoin from people that work in big universities, that still hold onto archaic beliefs about money emerging from barter. There are also a lot of PDF documents floating about with academic-sounding titles, written by people with academic sounding affiliations, but you never really know how good they are, or if they're written by some enthusiastic second-year students who don't really know what they're talking about.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Peer-reviewed journals obviously demand a certain degree of quality, but being published in a big journal doesn't necessarily mean an article is groundbreaking. It just means you managed to pitch it right, and get past a panel of peers who might have the same biases as you. For example, it's widely suspected that the peer-review process in the big economics journals systematically excludes economic theories that don't follow neo-classical interpretations of markets. To be accepted into the hallowed halls of such journals, one must cow down and play the game, and couch everything in the apolitical language of mathematical equations and spurious models. Needless to say, some of the most interesting economics research is <i>not</i>&nbsp;found in the big prestige economics journals.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">So, it's best to treat this list as an initial starting point to launch into papers, and to make your own decisions about how interesting they are.</div><br /><br /><h3 style="text-align: left;"><b>Research themes: The tech, the law, the economics... the humans</b></h3><div style="text-align: justify;">There are a number of themes coming out in the research</div><ol style="text-align: left;"><li style="text-align: justify;">Firstly, there is a huge amount of technical stuff about the cryptography, computer science, security and systems design. Computer science researchers have clearly enjoyed the chance to get involved in this cutting-edge area. The only problem with this though, is that the quantity of this research&nbsp;drowns out a lot of the equally important social sciences research, and&nbsp;tends to present Bitcoin as a technological issue, rather than a profoundly human phenomenon</li><li style="text-align: justify;">Secondly, there is a sub-strand of the tech-related research that focuses on how to change Bitcoin, or create a variant of it, or point out some failing it has. See, for example, this piece on a Bitcoin-based <a href="http://onlinelibrary.wiley.com/doi/10.1002/sys.21291/abstract">emissions trading model</a></li><li style="text-align: justify;">Thirdly, there is a pretty big strand of research on the regulatory status, tax status, and legal status of Bitcoin. This is clearly driven by the need to reach some clarity on these questions so that people know how to practically proceed in the short-term. There is also a nascent strand of accounting research - check out, for example, this <a href="http://onlinelibrary.wiley.com/doi/10.1002/jcaf.22016/abstract">new piece</a></li><li style="text-align: justify;">Fourthly, there is a growing field of economic analyses of Bitcoin, mostly coming from pretty mainstream economics, or from Austrian-style libertarian economics. Like most economics, the attempt is to create models, or to analyse incentive structures, and they will tend to call people 'agents', rather than, well, 'people'. See, for example, <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2495572">this piece</a> coming out in the prestigious Journal of Economic Perspectives</li><li style="text-align: justify;">Then, finally, there is an emergent trickle of social sciences research on actual humans, including the sociology, anthropology, politics and even <a href="http://link.springer.com/article/10.1007/s10551-014-2354-x">ethics</a> of the system. This research remains hugely underrepresented though, which is ironic, because it's by far the most important area of research</li></ol><div style="text-align: justify;"><br /></div><h3 style="text-align: left;">Areas that need more attention: Humans</h3><div class="separator" style="clear: both; text-align: center;"><a href="http://hannahc12.files.wordpress.com/2010/05/evolution1.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://hannahc12.files.wordpress.com/2010/05/evolution1.jpeg" height="165" width="400" /></a></div><div class="separator" style="clear: both; text-align: left;">There are a number of areas, in my opinion, that need deeper research and analysis.&nbsp;</div><ul style="text-align: left;"><li style="text-align: justify;">Bitcoin as money: There are surprisingly&nbsp;few real discussions about the monetary theory embedded in the Bitcoin code, or how it might function as money. The papers on 'the economics of Bitcoin' don't address it deeply enough (but then again, economics has always been pretty shite at money analysis). I'd love to see more deep analyses of the nature of decentralised electronic money, and the social dynamics of such money</li><li style="text-align: justify;">Despite the huge amounts of focus on the technology of Bitcoin, there is still very little critical reflection on the technological politics of Bitcoin, or critical studies of decentralised algorithm-based systems. My piece on the <a href="http://www.e-ir.info/2014/06/01/visions-of-a-techno-leviathan-the-politics-of-the-bitcoin-blockchain/">Politics of the Bitcoin Blockchain</a>&nbsp;sketches out areas that need more focus</li><li style="text-align: justify;">Ethnographic studies of Bitcoin: There are a few surveys of Bitcoin users, and some interesting attempts to use social media to analyse users, but there are few true ethnographic studies&nbsp;</li><li style="text-align: justify;">The geographical dynamics of Bitcoin: Bitcoin is often spoken of as a global currency, but in reality most of the writing about it comes from Americans and Europeans, and many of them sitting in cities. I'd love to see true studies on, for example, whether someone in rural Zimbabwe would actually use cryptocurrency (given that most of my family is from rural Zimbabwe this is not just a throwaway question)</li></ul><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;"><b>25 interesting looking papers to peruse</b></h3><div style="text-align: justify;">I haven't had a chance to read all of these, but here are some really interesting looking articles that are probably not going to get as much attention as they should.&nbsp;</div><ol style="text-align: left;"><li style="text-align: justify;">“When perhaps the real problem is money itself!”: the practical materiality of Bitcoin (<a href="http://llaannaa.com/papers/maurer_nelms_swartz_bitcoin.pdf">here</a>): Written by the economic anthropologist Bill Maurer and his collaborators&nbsp;Lana Swartz and Taylor Nelms</li><li style="text-align: justify;">"BitCoin meets Google Trends and Wikipedia: Quantifying the relationship between phenomena of the Internet era" (<a href="http://www.nature.com/srep/2013/131204/srep03415/full/srep03415.html">here</a>)</li><li style="text-align: justify;">"Virtual Currency, Tangible Return: Portfolio Diversification with Bitcoins" (<a href="http://econpapers.repec.org/paper/solwpaper/2013_2f149159.htm">here</a>): One for &nbsp;the investment portfolio analysts</li><li style="text-align: justify;">"Nowcasting the Bitcoin Market with Twitter Signals" (<a href="http://arxiv.org/abs/1406.7577">here</a>)</li><li style="text-align: justify;">"The digital traces of bubbles: feedback cycles between socio-economic signals in the Bitcoin economy" (<a href="http://rsif.royalsocietypublishing.org/content/11/99/20140623">here</a>)</li><li style="text-align: justify;">"Who Uses Bitcoin? An exploration of the Bitcoin community" (<a href="http://ieeexplore.ieee.org/xpl/articleDetails.jsp?tp=&amp;arnumber=6890928">here</a>)</li><li style="text-align: justify;">"Is Bitcoin a Decentralized Currency?" (<a href="http://ieeexplore.ieee.org/xpl/articleDetails.jsp?tp=&amp;arnumber=6824541">here</a>)</li><li style="text-align: justify;">"Testing the Efficient Market Hypothesis on Bitcoin Exchanges" (<a href="http://www.diva-portal.org/smash/record.jsf?pid=diva2%3A725360&amp;dswid=1492">here</a>)</li><li style="text-align: justify;">"Alderney: gambling, Bitcoin and the art of unorthodoxy" (<a href="http://www.islandstudies.ca/sites/islandstudies.ca/files/ISJ-9-1-Connell.pdf">here</a>): From the <i>Island Studies Journal</i>, ha ha</li><li style="text-align: justify;">"Coining Bitcoin's 'legal bits': Examining the regulatory framework for Bitcoin and virtual currencies" (<a href="http://jolt.law.harvard.edu/articles/pdf/v27/27HarvJLTech587.pdf">here</a>)</li><li style="text-align: justify;">"Bitcoin and the legitimacy crisis of money" (<a href="http://cje.oxfordjournals.org/content/early/2014/12/21/cje.beu067.abstract">here</a>), coming out in the <i>Cambridge Journal of Economics</i>, from Beat Weber. Beat is critical of Bitcoin, and it's worth checking out his other piece in the Journal of Peer Production <a href="http://peerproduction.net/issues/issue-4-value-and-currency/invited-comments/can-bitcoin-compete-with-money/">here</a></li><li style="text-align: justify;">"Do the Rich Get Richer? An Empirical Analysis of the Bitcoin Transaction Network" (<a href="http://www.plosone.org/article/info%3Adoi%2F10.1371%2Fjournal.pone.0086197">here</a>)</li><li style="text-align: justify;">"The (A)Political Economy of Bitcoin" (<a href="http://triplec.at/index.php/tripleC/article/view/606/562">here</a>) - this one is from Greek commons-based economy advocates from the P2P Lab</li><li style="text-align: justify;">"Bitcoin: a regulatory nightmare to a libertarian dream" (<a href="http://policyreview.info/articles/analysis/bitcoin-regulatory-nightmare-libertarian-dream">here</a>), from P2P law expert Primavera de Filippi</li><li style="text-align: justify;">"Internet architecture and the layers principle: a conceptual framework for regulating Bitcoin"(<a href="http://policyreview.info/articles/analysis/internet-architecture-and-layers-principle-conceptual-framework-regulating-bitco-0">here</a>), from a Google employee</li><li style="text-align: justify;">"Characteristics of Bitcoin Users: An Analysis of Google Search Data" (<a href="http://econpapers.repec.org/paper/pramprapa/59661.htm">here</a>)</li><li style="text-align: justify;">"The politics of cryptography: Bitcoin and the ordering machines" (<a href="http://peerproduction.net/issues/issue-4-value-and-currency/peer-reviewed-articles/the-politics-of-cryptography-bitcoin-and-the-ordering-machines/">here</a>): This is from Quinn Du Pont, who is doing intriguing work on cryptography political philosophy</li><li style="text-align: justify;">"The paradoxes of distributed trust: Peer-to-peer architecture and user confidence in Bitcoin"(<a href="http://peerproduction.net/issues/issue-4-value-and-currency/peer-reviewed-articles/the-paradoxes-of-distributed-trust/">here</a>)</li><li style="text-align: justify;">"Synthetic commodity money" (<a href="http://www.sciencedirect.com/science/article/pii/S1572308914000722">here</a>) - this one is in the Journal of Financial Stability, but free versions are floating around on the internet</li><li style="text-align: justify;">"The Economics of Bitcoin and Similar Private Digital Currencies" (<a href="http://www.sciencedirect.com/science/article/pii/S1572308914001259">here</a>) -&nbsp;this one is in the Journal of Financial Stability, but free versions are floating around on the internet</li><li style="text-align: justify;">"The Ethics of Payments: Paper, Plastic, or Bitcoin?" (<a href="http://link.springer.com/article/10.1007/s10551-014-2354-x">here</a>): In the big-hitter <i>Journal of Business Ethics</i></li><li style="text-align: justify;">"Are Bitcoin Users Less Sociable? An Analysis of Users’ Language and Social Connections on Twitter" (<a href="http://link.springer.com/chapter/10.1007/978-3-319-07854-0_5">here</a>): A very intriguing paper, which suggests that 'Bitcoin followers are less likely to mention family, friends, religion, sex, and emotion related words in their tweets and have significantly less social connection to other users on the site'</li><li style="text-align: justify;">"How Did Dread Pirate Roberts Acquire and Protect his Bitcoin Wealth?" (<a href="http://link.springer.com/chapter/10.1007/978-3-662-44774-1_1">here</a>): Everyone likes a pirate story</li><li style="text-align: justify;">"Do libertarians dream of electric coins? The material embeddedness of Bitcoin" (<a href="http://www.tandfonline.com/doi/full/10.1080/1600910X.2013.870083#.VKAYcF4h3A">here</a>): Great title, and out in a pretty innovative Scandinavian journal</li><li style="text-align: justify;">I'll let you decide what number 25 is: Perhaps a paper that you'd like to write?</li></ol><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">Enjoy, comment, and please share</h3><div>Thanks for reading this. If you see any mistakes in the list, or have any suggestions and additions you'd like me to make, please do comment, either here or on the Google Doc. I get sent an email every time that happens so I'll definitely see them. I'll update this list periodically as new pieces come out. Finally, please do share this with people who might find it useful - I spent a fair amount of effort creating this, so I want it to be as useful as possible.</div><div style="text-align: justify;"><br /><br /><h3 style="text-align: left;">Lastly: Much energy went into this, so feel free to buy me a beer</h3><div>This took me at least four days to build and double-check, and it was pretty damn exhausting. If it's useful to you, and helps you in your own research or enlightenment, please do consider supporting me. Here are three things you could do:<br /><ul><li>Donate bitcoin to: 18TyygKmmW1xnXLBJ1q5BtBEAAaMGfrbhn&nbsp;</li><li>Or&nbsp;<a href="http://suitpossum.blogspot.co.uk/p/support.html">buy me a virtual beer</a>!</li><li>Share on Twitter or <a href="http://www.reddit.com/">Reddit</a></li></ul><br /><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://3.bp.blogspot.com/-PcBY0AM-ER4/VKKE8ZUyb9I/AAAAAAAACUM/-z66lUSvmlQ/s1600/18TyygKmmW1xnXLBJ1q5BtBEAAaMGfrbhn.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="200" src="http://3.bp.blogspot.com/-PcBY0AM-ER4/VKKE8ZUyb9I/AAAAAAAACUM/-z66lUSvmlQ/s1600/18TyygKmmW1xnXLBJ1q5BtBEAAaMGfrbhn.png" width="200" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">ME BTC ADDRESS</td></tr></tbody></table><ul></ul></div><div style="text-align: left;"><br /></div><div style="text-align: left;"><br /></div></div><br /></div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/ozRlEqOjAio" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com14http://suitpossum.blogspot.com/2014/12/academic-bitcoin-research.htmltag:blogger.com,1999:blog-6454624189383327908.post-58806756895971247062014-10-20T19:07:00.000+01:002016-05-08T22:25:55.643+01:00Bringing the jungle to the city: A techno-shamanic quest to reconnect urban life to ecological reality<div dir="ltr" style="text-align: left;" trbidi="on"><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="https://nicolettalolli.files.wordpress.com/2012/04/daleast-web-work-04-1038x615-602x356.jpg?w=700" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="295" src="https://nicolettalolli.files.wordpress.com/2012/04/daleast-web-work-04-1038x615-602x356.jpg?w=700" width="500" /></a></div><br /><div style="text-align: justify;"><hr />Note: I originally published this in June 2014 Issue of <a href="http://www.contributoria.com/issue/2014-06/534fee75c679a5ac42000014/">Contributoria</a>. It is republished here under a <a href="https://creativecommons.org/licenses/by-nc/4.0/">Creative Commons</a> licence. If you wish to republish, please also attribute the original article</div><hr /><div style="text-align: justify;"><br /></div><div style="text-align: justify;">I once lived in a <a href="http://en.wikipedia.org/wiki/Coffee_Bay">village</a> on the rural Wild Coast of South Africa. It had a <a href="http://upload.wikimedia.org/wikipedia/commons/3/34/Coffee_Bay.jpg">horizon so vast</a> you could almost glimpse the curvature of the earth. There was one computer with a dial-up modem, and it almost never worked. That was just before I moved to London, to work in the steel and concrete of the city’s colossal financial sector. In London, as in many cities, you cannot see the horizon. The average visibility extends perhaps 30 metres in front of you. On the other hand, you are connected to a vast hallucinogenic web of broadband media connection, constantly.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">That is, of course, provided the electricity doesn't go out.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">In London, the electricity doesn't tend to go out. It is hooked into the all-powerful <i>National Grid</i>, a company I used to try sell financial derivatives to. In South Africa though, we experienced the ‘<a href="http://en.wikipedia.org/wiki/Rolling_blackout#South_Africa">rolling blackouts</a>’ of 2007. I remember how, for hours at a time, the electricity supply was shut off and cities were left in darkness. It was an embarrassing failure for the electricity giant Eskom, but the crisis had a strange silver lining. In the absence of electricity to watch television or browse the internet, people wondered outside, sitting on the front steps of their houses, talking with passers-by, watching the stars that were normally drowned out by the glare of the city.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">It was as if, for a moment, a broader illusion had been turned off with the television sets. The bubble of streetlight security control disappeared, but instead of uneasy discomfort, it brought for some a sense of calm. The speed slowed down. People suddenly realised how much they took for granted.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">Stars and horizons</h3><div class="separator" style="clear: both; text-align: center;"></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">In their natural setting, stars and horizons serve to remind you of your context. Seeing them helps to brings home the point that you are on a <a href="http://www.wallpapersdesign.net/wp-content/uploads/2012/11/Planet-Earth-Landscape.jpg">giant rolling planet</a>, suspended within an enormous galactic system.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">That’s something that doesn’t actually sit well with the implicit ideology of the city. Forget being on a planet. You are in <i>LONDON</i>, a uniquely important place in a uniquely important time, a control tower from which to master destiny and the external elements. Indeed, in the city, horizons and stars are not real things. Rather they are the basis for kitsch inspirational quotes (‘look to the horizon, reach for the stars’), pasted on the cubicle walls of wannabe high-flying young urban professionals, representing abstract places you cannot really reach.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">And herein lies a central tension in the modern global mega-city. It might be a dynamic hub of glamorous entertainment, high-stakes commerce and edgy artistic sophistication, but it is also an engine of alienation, distancing us from the reality of our context, the land where food is grown, the ground in which fossil fuels and metals are dredged from the earth, and the ecological systems that underpin it all. In the city, you are divorced from that broader context, and placed into a different one – an exciting one perhaps – but a disconnected one nevertheless.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The disturbing possibility therefore, is that urban elites – whether in London, Brussels, Tokyo, Mumbai or New York – wield the greatest political and cultural trendsetting power, and yet may retain the least knowledge of the actual basis of their own survival. Those who do understand such realities – such as copper mine workers in Peru, or oil workers in the Niger Delta – are politically marginalised, and frequently looked down upon as backward objects of pity, or faces on charity aid brochures.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">And <a href="http://en.wikipedia.org/wiki/Urbanization">urbanisation</a> is not slowing down. So, in an era of hyper-consuming global metropolises, we face a crucial question with deep consequences: How does one live in the city whilst somehow retaining a grip on ecological reality?</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">The quest</h3><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="http://static.squarespace.com/static/5317e749e4b0fa5080a8c56e/t/53181fc4e4b035ad03365268/1402016572561/?format=1500w" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://static.squarespace.com/static/5317e749e4b0fa5080a8c56e/t/53181fc4e4b035ad03365268/1402016572561/?format=1500w" height="66" width="400" /></a></div><br /></div><div style="text-align: justify;">This essay is my opening foray into that question. It doesn't quite answer it, but it sets out a map of what conceptual and practical territories need to be covered. I'm then going to use that map over the next few months as I undertake something of a techno-shamanic adventure into the mire of the city as part of collective called <a href="http://www.wisdomhackers.com/">Wisdomhackers</a>. There are 26 of us, all immersively exploring different aspects of modern life (which, let’s face it, is often a catchphrase for urban life), coordinated by the ‘Amish Futurist’ and explorer of informal pirate economies, <a href="https://twitter.com/alexaclay">Alexa Clay</a>.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The collective includes Aina Abiodun, grappling with the implications of techno-utopianism, Anna Stothard, rethinking our relationship with physical objects in a throwaway consumer culture obsessed with change, Antoine Sakho, exploring technology consumption philosophy, Nathan Schneider, working on new social contracts, Lee-Sean Huang, exploring the disembodied experience of ‘knowledge work’, and Brock leMieux, experimenting with digital learning infrastructures.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">In delving into city life and technology, I'm departing somewhat from my normal writings <a href="http://suitpossum.blogspot.co.uk/p/articles.html">focused on the financial sector</a>. There is a deep link though. The financial sector, after all, is intensely urban, and intensely technological, and I have a suspicion that some of the roots of financial crisis, and broader economic crisis, are inextricably linked to city life itself.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">Exploring urban ambiguity</h3><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="http://2.bp.blogspot.com/-3sl_jAmHcLM/U5TmMMPjqLI/AAAAAAAACLg/pIguzTkAtrQ/s1600/Toilet+paper.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="267" src="https://2.bp.blogspot.com/-3sl_jAmHcLM/U5TmMMPjqLI/AAAAAAAACLg/pIguzTkAtrQ/s1600/Toilet+paper.jpg" width="400" /></a></div><br /></div><div style="text-align: justify;">Cities are deeply ambiguous, even contradictory places. On the one hand, they can be exuberant crucibles of cosmopolitan culture, liberating one from oppressive social bonds and bigotries, leaving you free to join loose floating groups of like-minded people. If you’re an ostracised gay person in rural Mpumalanga, or an aspiring tech entrepreneur in the Australian outback, or <a href="http://en.wikipedia.org/wiki/Billy_Elliot">Billy Elliot</a> in a coal-mining town, are you going to stick around? Hell no! You go to Johannesburg, Brisbane, the Royal Ballet School in London. You become a <i>city dweller</i>, just like me.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">And if there is one thing that we know about cities, it’s that they are veritable hives of technology, and the physical host for the ghostly force of <i>innovation</i>. That’s as true today as it was during the Middle Ages, when people from distant small village towns needed to buy their church bells from specialist smiths in London. Cities host <a href="http://en.wikipedia.org/wiki/Economies_of_agglomeration">economies of agglomeration</a>, and small towns frequently have too few people to support the capital and labour requirements of high tech industries. The same thing can be said about opera. Not enough people to support a big specialist theatre in the Ausi outback. Got to go to <a href="http://upload.wikimedia.org/wikipedia/commons/7/7c/Sydney_Opera_House_-_Dec_2008.jpg">Sydney</a>.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">And this indeed is an engine of ‘progress’, if defined in terms of material and cultural output levels. The city churns out new ideas, new music, new sub-cultures, new technology, new everything, all the time.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">On the other hand, cities also churn out an extraordinary amount of bullshit. It crawls with superficial phonies (so despised in <a href="http://en.wikipedia.org/wiki/The_Catcher_in_the_Rye">Catcher in the Rye</a>), asshole businessmen, aggressive drivers, chancers and purveyors of meaningless fads. Pampered high-life culture meets low-life crime. Blinkered positive-thinking optimism meshes with hard-edged cynicism. And all the time, giant piles of material and cultural waste accumulate, last month's fashion magazines shuttled out of sight into the landfill.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Part of this dynamic is due to the fact that newness itself starts to feel old after a while, so people become <i>jaded</i> in the city, demanding and hard to please. In a sense, city culture becomes a prisoner of its own success, as once-innovative breakthroughs become stultifying producers of casual boredom. As a South African in London, I arrived wide-eyed and gawking at the incredible underground transportation system. A year later I was bitching about it.<i> Oh my god, it’s five minutes late!</i></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Cities have also long had a reputation for inspiring self-serving individualistic decadence and moral corruption. I’ve experienced my fair share of it, from the nauseating overpriced cocktail culture of Mayfair, to the self-destructive mindfuck of bankrupt <a href="https://www.youtube.com/watch?v=7k2NIFcYNLs">Withnail &amp; I</a> melancholia. I lived with a guy who had such a drug problem that he couldn’t bring himself to buy toilet paper, and started using the pages of an old Stephen King novel to wipe his ass. The shocking thing though, wasn't that he was doing that, but that <i>I didn't care</i>. If you’re in that mode for long enough, it breeds a kind of anarchic disdain for convention, a <i>Down and out in Paris and London</i> haze which is both terrifying and liberating, incredibly deep, or incredibly shallow, depending on who you are.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="http://www.btchflcks.com/wp-content/uploads/2013/10/Editors-Pick-Withnail-and-I1.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://www.btchflcks.com/wp-content/uploads/2013/10/Editors-Pick-Withnail-and-I1.jpg" height="183" width="400" /></a></div><br />There is also a long history of people lamenting these dynamics, from the Book of Revelation reviling the depravation of Babylon, to <a href="http://www.memo.fr/en/article.aspx?ID=JJR_IDE_046">Rousseau</a> scolding city dwellers ‘depraved by sloth, inactivity, [and] the love of pleasure’, to Utopian Socialists leaving to start <a href="http://en.wikipedia.org/wiki/Intentional_community">intentional communities</a> in the countryside, to <a href="http://en.wikipedia.org/wiki/Paul_Gauguin#Tahiti">Gauguin leaving for Tahiti</a>. Recently, even <a href="http://grist.org/politics/an-occupy-founder-says-the-next-revolution-will-be-rural/">Micah White of Occupy Wall Street</a> began berating the cadres of urban activists and moved to Nehalem to launch a rural revolution (albeit one less demanding than the rural revolution demanded under <a href="http://en.wikipedia.org/wiki/Maoism">Maoism</a>).<br /><br /></div><div style="text-align: justify;">Perhaps urban ambiguity is rooted in the fact that the same loose bonds that can unlock empowering forms of freedom, can simultaneously create disempowering forms of disassociation. Take, for example, early <a href="http://en.wikipedia.org/wiki/Proletariat">proletarianisation</a>, whereby people disenfranchised from the land drifted into wage labour in cities. The loosening of rural bonds was associated with the emergence of the ‘free’ human labour market, the ability to voluntarily detach oneself from social – and ecological – ties, eerily similar to how a marketised product detaches from those who produce it. The open-minded and expansive search for self is always prone to being twisted into the service of corporate power, taking the commoditised, shallow form of the fun-seeking consumer shopping for identity.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">Urban dynamic 1: Illusions of access in a world of interfaces</h3><div style="text-align: justify;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://www.thesmartshop.co.uk/upload/store/products/JSJSLW260SS/JSJSLW260SS_main.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://www.thesmartshop.co.uk/upload/store/products/JSJSLW260SS/JSJSLW260SS_main.jpg" height="320" width="320" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">DON'T MIND ME</td></tr></tbody></table><br /></div><div style="text-align: justify;">Many things are indeed very shallow in a city. Consider a simple plug socket, a two-dimensional interface discreetly inset within the wall. Somewhere, <i>elsewhere</i>, natural gas from the North Sea is being burned in turbines to produce a generic, seemingly invisible form of all-purpose energy called electricity, which is channelled via the electrical grid and now waits innocently for me at the plug. The wall blocks the outside reality while the plug presents a new one. We might say our experience of energy <i>begins</i> at the plug. Everything that happened before this is blocked out.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Most interfaces are like this. One part <i>blocks you</i> from something, while another part invites you into something else. In the city we’re faced with a myriad of such interfaces. Consider the supermarket. The simple Tesco aisle is a sanitised interface. It presents us with free-floating consumption items whilst simultaneously blocking awareness of their prior production processes that happened <i>elsewhere</i>. It’s a key institution of modern psychological disconnection, doubling as an exemplar of modern sophistication.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">And what about the <a href="http://en.wikipedia.org/wiki/Automated_teller_machine">ATM</a>? It's an interface into the banking system, a machine of convenience replicating what a human bank teller used to do. They're often placed next to physical bank branches, giving the impression that the money coming out of the wall came from 'inside' the bank. Given that the majority of our money is in fact electronic, ‘stored’ in a bank's datacentre-based IT system, nowhere remotely close to the ATM, this is something of an illusion. And what about my debit card? Is the money <i>in</i> the plastic card, or <i>elsewhere</i>? Maybe you see a taxi displaying an advert for a share-trading account. The account is just an interface into an underlying stockmarket, and the shares there are just interfaces too, channelling returns generated <i>elsewhere</i>.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">But even the seemingly down-to-earth world of physical buildings frequently represents a kind of interface. For all the rhetoric of city freedom, the average person experiences the city as a zone of things that you can see but that you will never actually interact with, a collection of human and physical objects, many of them <i>out of bounds</i>. The streets might be free to all, but the buildings are a series of locks and gates, or rather, <i>paywalls</i>, and differential access to them abounds. I can look at the two-dimensional frontage of the Ritz, but can I experience the three dimensional space beyond the facade?</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">You can of course use wealth to unlock these paywalls. Wealth brings a kind of universal <a href="http://en.wikipedia.org/wiki/Freedom_of_the_City">freedom of the city</a> access card (albeit, ironically, if you’re very poor, you may be so marginalised that you gain a different sort of freedom to use parts of the city that many people wilfully shut themselves off from, the parallel world of trashcan alleys, shacks and derelict squats, hauntingly <a href="https://www.flickr.com/photos/arnade/8470456893/">captured here</a> by photographer Chris Arnade). For the average person though, the city expresses itself to you as a kind of aspiration, <i>things you maybe one day will get to do</i>.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">This phenomenon applies to human relations too. In the city you’re faced with a constant stream of people you will never meet. Have you heard of the term <i><a href="http://www.dictionaryofobscuresorrows.com/post/23536922667/sonder">sonder</a></i>? It’s a neologism from the <i>Dictionary of Obscure Sorrows</i>, referring to the realisation that every person that passes you by is living a life as intense as your own, but that you’ll never have access to it, with you perhaps appearing “only once, as an extra sipping coffee in the background, as a blur of traffic passing on the highway, as a lighted window at dusk.”</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">Urban dynamic 2: FOMO meets YOLO in the buzz of constant surveillance</h3><div style="text-align: justify;"><br /></div><iframe allowfullscreen="" frameborder="0" height="375" src="//www.youtube.com/embed/1lyu1KKwC74" width="500"></iframe> <br /><div style="text-align: justify;"><br />The ironic consequence of this is that you’re almost <i>never alone</i> in a city, but are surrounded by people who often don’t offer much in the way of sympathy either. This is part of that hard-edged, <a href="https://www.youtube.com/watch?v=1lyu1KKwC74">bittersweet symphony </a>city vibe that some people get a big kick off, blitzing down the road shoulder-barging people out the way, leaving kind-hearted romantics feeling deeply isolated, wanting to escape to the countryside. Of course, the endless stream of people offer <i>potential</i> for interaction, a tantalizing potential for sex, fun, intellectual debate, and experience. It culminates in the ever-present <a href="http://en.wikipedia.org/wiki/Fear_of_missing_out">fear-of-missing-out</a> (FOMO) complex, breathlessly (and tragically) set against the ticking timebomb of the <a href="http://knowyourmeme.com/memes/yolo">you-only-live-once</a> (YOLO) complex.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The sense of never being alone is part of the city <i>buzz</i>, but it also doubles as an element of a peculiar urban surveillance complex, joining the interconnected web of visible policing, endless lights, and, if you glance upwards, CCTV cameras, all meshing together to give the subsconscious awareness of always potentially being on someone’s radar. Here’s an experiment: Walk down a city pavement and then make an abrupt stop and stand frozen still. Can you hold it for more than 20 seconds? An invisible force hits you. You feel the weight of people potentially watching you (maybe you can call it the <a href="http://en.wikipedia.org/wiki/Panopticism">panopticon</a>). <i>Why have you stopped for no reason?</i></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">There are ways to escape the surveillance complex, and at any one moment in central London you’ll find people existing in pockets of unmonitored space, feeling the wild tinge of alone-ness in a toilet cubicle, in old elevators, behind pillars in underground parking lots, in back alleys. We intuitively know where to find these places. One just need imagine where you would go if you were trying to find a place to piss in the city, or to have sex, or basically to do anything slightly illicit.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">Urban dynamic 3: In control of freedom</h3><div style="text-align: justify;">But even in the toilet cubicle you are not entirely alone. There are always the attempts to use the physical space to communicate with you, drunken messages plastered on the walls, and then, of course, there is the ADVERTISEMENT on the back of the door. Just like old communist cities were dotted with <a href="http://en.wikipedia.org/wiki/Socialist_realism">socialist realist artworks</a> depicting idealised visions of humanity working towards common goals, so the surrealist corporate propaganda urges you to act on the goal of becoming something slightly different to what you are, to give in to vague fears or aspirations (reaching <a href="https://www.youtube.com/watch?v=7bXJ_obaiYQ">dystopian proportions</a> in the sci-fi imagination of Minority Report).</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Advertising is part of an obvious ongoing attempt to influence thought, to <i>control</i> to some end, but it tends to cloak it within the banner of either freedom, or of security. Under the hedonistic exterior of the <a href="http://gababa.files.wordpress.com/2011/09/calvin-klein-white-wash-jeans-billboard.jpg">Calvin Klein billboard</a> there is clearly some highly-strung anal executive trying to orchestrate a well-oiled campaign. It’s the same with the friendly pleas for civility on the London Underground, or the Mayor’s cycling campaign, or the health and safety warning signs, the traffic lights and rules. They're all reflective of perhaps the deepest ambiguity of a city, that between freedom and control, and between control and its confusingly similar echo, security. <i>Levi's makes me feel secure.</i></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The perception of power and control as security is a hallmark of ‘mainstream’ <a href="http://en.wikipedia.org/wiki/Status_quo">status quo</a> thought, constituting what we can call, loosely, <i>hegemony</i>, the way that powerful institutions appear in popular consciousness as reassuringly normal. The police represent security to those in the mainstream, control to those outside, just like the smiling faces of corporate executives appear respectably professional to some, and as exploitative masks of manipulation to others.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">We have a long tradition of critiquing adverts, corporate executives and police violence, isolating the exploitative strands found within the comfortable security. Perhaps the most pervasive control complex of the city though, is the most subtle, and we take it so for granted that it’s almost invisible. If there is one thing that most social classes implicitly agree on, it’s that <i><a href="http://en.wikipedia.org/wiki/Wilderness">wilderness</a></i> is not allowed to flourish in the city. We have developed technologies of control like concrete to resist the chaotic wiles of weeds. We have pest removal companies and poisons to remove pockets of alternative life as they form, and tree surgeons assassinating rogue branches that don’t obey council rules. We might allow carefully tended parks, but wilderness, NO!</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">Urban dynamic 4: The echo-chamber of urban elitism</h3><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="https://encrypted-tbn1.gstatic.com/images?q=tbn:ANd9GcTiS4fJHlbQlmq5fLMBMs87XLvPvJr1salVEVFTF_XwdiZbLjGA" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="326" src="https://encrypted-tbn1.gstatic.com/images?q=tbn:ANd9GcTiS4fJHlbQlmq5fLMBMs87XLvPvJr1salVEVFTF_XwdiZbLjGA" width="400" /></a></div><br /></div><div style="text-align: justify;">The silent bulwarks of concrete control tend to get forgotten, or hidden, amidst the loud buzz of urban creativity, and it's in this contradictory setting that a covert cultural agreement emerges. It runs across the political spectrum, and across national boundaries. It is the tacit agreement that the City is where everything important happens, where policies get made, where trends get set. It’s wired into urban mentality, and above all it finds expression in people who consider themselves global jet-setters – the transnational urban elite – and in our favourite technology, <i>the internet</i>.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The internet, when taken in aggregate, does not reflect ‘the world’. It reflects the relentless content production of large global cities, and the transnational aspirations of transnational urbanites. There are up to 3 billion Google search results for New York. How many for the entire country of Angola? Around 126 million.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Urbanites have long be criticised for having their feet off the ground, for lacking an earthy connection to the soil, but the sheer scale of this potential disconnection has increased as the sources of distraction have become richer than ever, a commercial media complex interwoven ever more closely into experience, the mobile internet streaming data from urban trendsetters around the world, music videos from San Francisco, stock prices from Hong Kong. This is the distraction complex, pointed out in Guy Debord’s <i><a href="http://en.wikipedia.org/wiki/The_Society_of_the_Spectacle">Society of the Spectacle</a></i>, the basis of Jean Baudrillard’s concept of <a href="http://en.wikipedia.org/wiki/Hyperreality">hyperreality</a>. You can live an entire life in this cultural echo-chamber, surrounded by others doing the same. Base level awareness of things like soil and rain merely distract from more important upper level realities. Who cares about watersheds when we can discuss vinyl, technology, business?</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">So let’s talk business then. All business, in the final analysis, comes down to raw human labour (physical or intellectual), which is supported by agriculture and augmented by technology (made with materials dug out of the earth) that's fuelled by energy sources. That's a formula captured in everything from large-scale construction of highways to the simple act of using a photocopier after lunch (labour + food + technology + electricity). The pinnacle of city business though, is <i>finance</i>, the portal for amplifying and steering previously accumulated capital into businesses of the future. The headquarters of global financial institutions are profoundly urban, and it’s in this setting that professionals make daily decisions about financing destructive projects in far-away places. The disconnected mentality of the city feeds into disconnected notions of economic life. Forest destruction is reduced to a series of numeric cash flow projections in excel spreadsheets.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">The quest part 1: Getting behind the interfaces</h3><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcR27exJ2QM0JVilLsbKy5JXs7kDf5_XwKEYveDk7MWaucbkKAsD" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="266" src="https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcR27exJ2QM0JVilLsbKy5JXs7kDf5_XwKEYveDk7MWaucbkKAsD" width="400" /></a></div><br /></div><div style="text-align: justify;">So let's imagine it's evening in the city. You close down the spreadsheet, and pull on your suit jacket to head across town to a bar, walking along the controlled space of the pavement, making a pit-stop in a shop to pick up a disassociated pack of cigarettes piped in from some unknown location, petroleum-powered cars blurring past.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">If you were, however, to look down the back alley you pass, or through the sewer grilles under your feet, or behind the billboards, you’d see that there are strange piping systems, ventilation shafts, bundles of wires, mechanical pulleys, delivery docks, waste management systems, storage depots, dirt and grease compounds. The world of interfaces is kept illuminated and co-ordinated via a vast, elaborate network of manual workers who will undertake all the steps necessary to seamlessly deliver a glass of cider down on a table in a Shoreditch bar.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">This is the <a href="http://en.wikipedia.org/wiki/Front_and_back_ends"><i>back-end</i></a>, the spaces <i>behind the interfaces</i>. These are the only spaces in a city like London that you won’t find adverts.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">It is here then, that I will begin a search for the deeper soul of the city. The first part of my quest over the next few months is to go behind the interfaces. The back end is, for some, a zone of resistance. It is where the <a href="http://fc06.deviantart.net/fs44/i/2009/120/c/d/Urban_Fox_by_takeyourhatred.jpg">urban foxes</a> live. It is where squatters make homes in abandoned old pubs. It is where community gardens are started. It is where graffiti artists practice their craft. It is where weeds grow untended, little outposts of ecological resistance against concrete control. There are <a href="http://3.bp.blogspot.com/-yLLvAXiR4RU/TrAPq17GNAI/AAAAAAAABAE/Xt3jCBf1HSA/s400/Canary+Wharft+%2526+Tomatoes.jpg">wild tomatoes</a> growing on the banks of Thames, if you know where to look.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">It's in this space also that the <a href="http://en.wikipedia.org/wiki/Urban_exploration">urban exploration</a> subculture emerges, explorers of abandoned buildings and places you’re not supposed to see. The urban exploration crew is drawn to all that is designed to be out of bounds, which happens to include most key elements of city infrastructure, the underground train systems, the telecommunications towers, the electrical power yards, the warehouse complexes, the sewerage systems, the logistics nodes in the shadows or on the outskirts. They are back-end adventurers, on the one hand rebellious, but perhaps also seeking solace in places that nobody expects to find you in. It's a strand of the underground tradition of <a href="http://en.wikipedia.org/wiki/Psychogeography">psychogeography</a>, the attempt to defy or redefine the hegemonic logic of city spaces.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">If there is one thing that fascinates me in the city, it’s the food system. How the hell does all the food get in? How many kebab shops are there in London and how much meat do they go through in a day, and where does that come from? Where are the warehouses that Tesco uses to restock its imperial army of store fronts? How many steps are there between a fishing boat pulling a tuna out of the ocean and it ending up in a Yo! Sushi outlet in Soho?</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">The quest part 2: Bringing the back end to the front end</h3><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="http://fc02.deviantart.net/fs50/i/2009/316/5/6/Urban_Jungle_by_kapurito.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://fc02.deviantart.net/fs50/i/2009/316/5/6/Urban_Jungle_by_kapurito.jpg" height="250" width="400" /></a></div><br /></div><div style="text-align: justify;">The crux of the quest though, is to explore how these vast back end systems, and the ecological systems they drawn upon, can be brought to awareness within the very space that hides them. There are already urban movements that attempt to do this. The <a href="http://en.wikipedia.org/wiki/Urban_agriculture">urban agriculture</a> movements, for example, try to bring farm life right into the physical space of the city, creating rooftop plantations and <a href="http://hackneycityfarm.co.uk/">city farms</a>. In a more rebellious vein, there are <a href="http://en.wikipedia.org/wiki/Guerrilla_gardening">guerilla gardeners</a> seedbombing the stilted rows of public parks and manicured gardens with reckless wildflowers.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The key question for me though, is what part new high technology can play in all this. We are faced with a dilemma here. Technology historically has been used to cushion us from external realities. The streaming media capabilities of smart-phones have seemingly obvious potential to open our eyes to things, but they've also created an information bubble which appears on a day-to-day basis to mostly dull the senses, not make them alive to unseen realities.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">But it's worth a try, so I will explore different approaches to using such communications technology. Firstly, it is worth looking at <i>abstraction</i> techniques, technologies that take a complex external reality and attempt to make it into something understandable, or present it in the form of an analogy. For example, think of <a href="http://en.wikipedia.org/wiki/Big_data">big data </a>visualisation of <a href="http://internet-map.net/">internet usage</a>, or mapping projects, transforming the global subsidiaries of Goldman Sachs into a <a href="https://opencorporates.com/viz/financial/">digestible form</a>. It's an approach that really attempts to compress the disorientating scale of modern life into bite-sized chunks.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Secondly, there are <i>humanising</i> techniques, ways of taking something that is currently abstracted or obscured, and showing the story behind it. For example, can we build open data <a href="http://sourcemap.com/">maps of supply chains</a>, populate them with personal stories and data on resource usage, and feed them into <a href="https://www.layar.com/augmented-reality/">augmented reality apps </a>operating within the paradigm of the ‘<a href="http://en.wikipedia.org/wiki/Internet_of_Things">internet-of-things</a>’? Maybe even Google maps can be used: I’ve used StreetView to virtually drive the back streets of Hong Kong to get a <a href="http://goo.gl/maps/4zGkU">glimpse of Shenzhen</a> where my iPhone is assembled. And can I use the technological interface of the iPhone to breach its own branded façade and see the vast, intricate web of its own production?</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">And then there is the mother of all abstract façades, the financial sector, entrenched behind a firewall of political power and technical obfuscation. How might we breach the slick shell of financial instruments to view the gritty real world beneath? Is there a way to read the <i>Financial Times</i> that will make me alive to the deep human and ecological dynamics embedded in cold financial abstractions? Can we take a flat story about stockmarket regulation and see it for what it is, a network of urban politicians interacting with a network of urban businesspeople, battling it out amidst cultural constructions of risk, debt and the perceived potential of ‘assets’ in far flung, probably marginalised, production centres?</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">The battle for holistic fusion</h3><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Maybe none of this works without people being willing to adopt a certain critical orientation towards surface appearances. Groups like BankTrack do try to show the human and environmental stories behind <a href="http://www.banktrack.org/show/bankprofiles/bank_of_america#tab_bankprofiles_dodgydeals">major bank deals</a>, but getting those stories into the public domain is tough. How do you bring marginalised voices into the city, to the ears of people who implicitly benefit by remaining ignorant. <i>Out of sight, out of mind</i>.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">It's a crucial battle for holistic fusion. Because, the countryside and the city appear to me like the imagined split between body and mind, physicality and intellectuality, hard labour and innovation. And, in the same way that the artificial distinction between body and mind needs to be fought, the consciousness of the city needs to be fused with the consciousness of all those vast tracts of the earth’s surface that feed into it.</div><div style="text-align: justify;"><br /><hr /><br /></div><div style="text-align: justify;"><h3>Read on! Part 2</h3><div><br />To read Part 2 of this quest, please do sign up to <a href="https://thepigeonhole.com/books/wisdomhackers">Wisdomhackers on the Pigeonhole</a>, where it is being released&nbsp;as part of an awesome group book. The book comes out in weekly installments for the nominal sum of £5, which goes to help us struggling writers. My essay in the new collection is a 7000 word deep dive into the questions raised above, and it's a lot of fun. It includes critical explorations of the technological smart city narrative, cyborgs, LSD and the battle to reinvent political economy in the city<br /><br /><br /><hr style="background-color: white; color: #0a0000; font-family: Arimo; font-size: 14px; line-height: 19.6000003814697px; text-align: left;" /><h3 style="background-color: white; color: #0a0000; font-family: Arimo; margin: 0px; position: relative; text-align: left;"></h3><h3 style="background-color: white; color: #0a0000; font-family: Arimo; margin: 0px; position: relative; text-align: left;">Some things to do if you enjoyed this article...</h3><div style="background-color: white; color: #0a0000; font-family: Arimo; font-size: 14px; line-height: 19.6000003814697px; text-align: left;">I sometimes spend weeks writing these articles, and don't generally get paid to do it, so if you enjoyed please consider doing one or two of the following</div><ol style="background-color: white; color: #0a0000; font-family: Arimo; font-size: 14px; line-height: 19.6000003814697px; text-align: left;"><li style="margin: 0px 0px 0.25em; padding: 0px;">Support by&nbsp;<a href="http://suitpossum.blogspot.co.uk/p/support.html" style="color: #ff9900; text-decoration: none;">buying me a virtual beer</a></li><li style="margin: 0px 0px 0.25em; padding: 0px;">Tweet: You can&nbsp;<a href="https://twitter.com/intent/tweet?text=The%20Heretic%27s%20Guide%20to%20Global%20Finance%3A%20Hacking%20the%20Future%20of%20Money%3A%20Bringing%20the%20jungle%20to%20the%20city%3A%20A%20techno-shamanic...&amp;url=http%3A%2F%2Fsuitpossum.blogspot.com%2F2014%2F10%2Furban-ecology-and-techno-shamanism.html%3Fspref%3Dtw&amp;original_referer=http%3A%2F%2Fsuitpossum.blogspot.co.uk%2F2014%2F10%2Furban-ecology-and-techno-shamanism.html" style="color: #ff9900; text-decoration: none;">tweet it out</a>!</li><li style="margin: 0px 0px 0.25em; padding: 0px;">Share it on your Facebook wall&nbsp;<a href="https://www.facebook.com/sharer/sharer.php?u=http%3A%2F%2Fsuitpossum.blogspot.com%2F2014%2F10%2Furban-ecology-and-techno-shamanism.html%3Fspref%3Dfb&amp;t=The+Heretic%27s+Guide+to+Global+Finance%3A+Hacking+the+Future+of+Money%3A+Bringing+the+jungle+to+the+city%3A+A+techno-shamanic..." style="color: #ff9900; text-decoration: none;">here</a></li><li style="margin: 0px 0px 0.25em; padding: 0px;">Email it to one friend from&nbsp;<a href="https://www.blogger.com/email-post.g?blogID=6454624189383327908&amp;postID=5880675689597124706" style="color: #ff9900; text-decoration: none;">here</a></li><li style="margin: 0px 0px 0.25em; padding: 0px;">Leave a comment!</li><li style="margin: 0px 0px 0.25em; padding: 0px;">Submit to&nbsp;<a href="http://www.reddit.com/" style="color: #ff9900; text-decoration: none;">Reddit</a></li><li style="margin: 0px 0px 0.25em; padding: 0px;">Link to the article from your own blog so your readers can see it too</li></ol></div></div></div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/dBN7q_PRZ34" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com0http://suitpossum.blogspot.com/2014/10/urban-ecology-and-techno-shamanism.htmltag:blogger.com,1999:blog-6454624189383327908.post-71055923212537842392014-08-12T20:04:00.000+01:002016-12-22T19:10:03.697+00:00Much soul, very emotion: Why I buy into the cult of Dogecoin<div dir="ltr" style="text-align: left;" trbidi="on"><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="MsoNormal" style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="http://i.imgur.com/lbhwsM3.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="188" src="https://i.imgur.com/lbhwsM3.jpg" width="500" /></a></div><br /><hr />Please note: This piece was originally commissioned by the magazine&nbsp;<a href="http://www.digitalmcd.com/">MCD</a>, and will be appearing in French in their December edition.<br /><hr /><br /></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US">I use Dogecoin because I’m emotionally drawn to the dog. Unlike the distant, fossil-like Queen on the Pound banknote, the Shiba Inu is at once transcendent and approachable, self-contained but cuddly, looking into my eyes with a sideways glance, as if it just noticed me and is wondering whether I want to play or be left alone. It’s not an aggressive dog, or for that matter, a bouncy dog trying to lick me. It has self-directed, quirky <i>soul</i>, and it’s almost impossible to imagine this dog being an asshole.<o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US"><br /></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US">Some people in the crypto-currency community have written Dogecoin off as a joke, or even a scam. &nbsp;Maybe it’s both, but does this matter? All currency in the final analysis is really a scam, and the real question is which of those scams we want to agree to. I for one would rather pledge allegiance to a mystical pooch than to worship the image of a redundant monarch.<o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US"><br /></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US">Indeed, Dogecoin, to me, is the best of all of the so-called ‘alt-coins’, the alternative crypto-currencies that have emerged as offshoots from the original Bitcoin source-code. Here is why.<o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><br /></div><h3 style="text-align: justify;"><b><span lang="EN-US">Money isn’t ‘rational’</span></b></h3><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US"><br /></span><span lang="EN-US">Run this question through your brain: <i>Why did people invent pottery?</i> <o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US"><br /></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US">The response from many people is ‘because it must have been useful to store food and water’, an answer which chimes well with our prevailing rationalistic world view. Nevertheless, not only is the assumption that pottery was explicitly ‘invented’ problematic, but evidence suggests that it was originally used to create abstract <a href="http://evoanth.wordpress.com/2012/07/05/the-oldest-pottery-discovered/">religious figurines</a>. The details of such archaeological debates don't matter here - what matters is to realise that we often have an automatic bias towards thinking about history in terms of what we're used to in the present.<o:p></o:p></span><br /><span lang="EN-US"><br /></span></div><div class="MsoNormal" style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US">Why do I bring this up? I do so because there is a similar problem among many economists who attempt to peddle ahistorical narratives about ‘why people invented money’. Their story normally involves people ‘rationally’ designing money as an alternative to ‘barter’.&nbsp;</span>There is very little immediately rational about exchanging real goods for pieces of paper or shiny bits of metal though. Sure, once the social convention of monetary exchange is set up, it’s <i>useful</i>, but the imagined process in which bakers and butchers ‘invent’ money to deal with the awkwardness of exchanging meat for sourdough loaves is an attempt to reverse-engineer history from the perspective of present dogma.</div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US"><br /></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US">Money is not an object that can be invented. It is a social convention that has to be culturally constructed. The use of monetary tokens only appears rational once we’re party to a collective agreement (or delusion) to imbue those tokens with value, and that collective agreement needs to be constantly maintained.<o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><br /></div><h3 style="text-align: justify;"><b><span lang="EN-US">State power, local trust, meta-national mysticism and labour</span></b></h3><div><b><span lang="EN-US"><br /></span></b></div><div class="separator" style="clear: both; text-align: center;"><a href="http://sd.keepcalm-o-matic.co.uk/i/keep-calm-and-just-believe-in-me.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="400" src="https://sd.keepcalm-o-matic.co.uk/i/keep-calm-and-just-believe-in-me.png" width="342" /></a></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US"><br /></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US">In the case of our normal fiat currency, the collective agreement is given strength by the psychological (and real) force of official authorities. Most of our fiat currency is created by commercial banks, but derives much of its ‘reality’ from state endorsement of its legal status.<o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US"><br /></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US">In the absence of a state championing a currency, you need other factors to induce collective acceptance. For example, a very small community might be able to create and maintain a local currency backed by nothing but the preexisting communal trust network, woven together from mutual friendships, ties of honour and anxiety at facing exclusion from the social group.<o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US"><br /></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US">To create belief in a non-national currency that is not located in a small community though, is especially hard. Bitcoin provides a fascinating case study of the process. When it first started, Bitcoin commanded almost no value. It had one crucial feature though. At its heart was a mysterious, almost immaterial figure called Satoshi Nakomoto, a focal point for a community to rally around. <o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US"><br /></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US">The mystique of Satoshi was vital, imbuing what was otherwise a clever but cold piece of cryptography with a soul that people could believe in. Satoshi was the holy ghost in the machine, and the act of mining resembled a ritualistic quest to build on the blockchain started by the ghost. It’s through this process that the imagined value of Bitcoin came to life, and started taking on a reality.<o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US"><br /></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US">By contrast, imagine if a well-known person, like Stephen Hawking, invented Bitcoin. It would be devoid of all mystery, resembling a science project or a corporate product, rather than an underground <i>movement</i>. The specifics of Stephen’s personality would replace the cryptic symbol that the Satoshi figure once stood for, and what would you have left? A clever piece of cryptography, and a somewhat banal act of using up energy in running computers.</span></div><div class="MsoNormal" style="text-align: justify;"><br /></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US">That said, there is something about the pointless nature of randomly churning algorithms through a computer that is psychologically powerful. If you want to imagine that something essentially ephemeral is a useful commodity, it helps if you expend labour in creating it, because labour implies scarcity (you only need to work for things that are scarce), and scarcity implies a potential for an exchange value (if something is abundant there is no need to exchange anything for it). <o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US"></span><br /><span lang="EN-US"></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US">The computing power (‘labour’) put into the Bitcoin network does not create value in itself, but is a further psychological backer to Bitcoin tokens’ imagined value. <i>If they weren’t valuable we wouldn’t exert all this labour would we, and because we exert this labour they must be valuable, right?</i><o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><br /></div><h3 style="text-align: justify;"><b><span lang="EN-US">The emergent myth of Bitcoin’s rationality</span></b></h3><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://beer.indiafanclub.com/wp-content/uploads/2013/09/beer-pyramid-workers-beer-ration-5.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="233" src="https://beer.indiafanclub.com/wp-content/uploads/2013/09/beer-pyramid-workers-beer-ration-5.jpg" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">'WE WOULDN'T BUILD IT IF IT WASN'T VALUABLE... RIGHT?'</td></tr></tbody></table><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US">Interestingly, as the ritualistic process of mining has become increasingly competitive, and the commercialisation of Bitcoin has steamed ahead, new narratives have formed to explain why Bitcoin tokens ‘rationally’ have value. <o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US"></span><br /><span lang="EN-US"></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US">Chief among these is the idea, <a href="https://en.bitcoin.it/wiki/FAQ#Where_does_the_value_of_Bitcoin_stem_from.3F_What_backs_up_Bitcoin.3F">touted by the Bitcoin foundation</a> itself, that bitcoins have value ‘because they are useful’. It is part of a broader trend among the Bitcoin elite to rewrite history and claim, in hindsight, that the value of Bitcoin was always self-apparent, and that early adopters were just getting involved due to rational future expectations of increasing societal recognition of Bitcoin’s use value as a secure means of exchange. <o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US"><br /></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US">In this formulation, Bitcoin tokens derive their value by being part of a potentially useful system, the value of each bitcoin reflecting the aggregate market assessment of how useful it is to have a secure means of exchange. It’s kind of like arguing that containers on train carriages derive the entirety of their value from the usefulness of the rail network. The implicit narrative is this: <i>Hey, these things are useful as transmitters of value for exchange, so let’s compete over them, and in so doing create their market value, which can now be used for exchange</i>. <o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US"><br /></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US">Circular no? There may be a glimmer of truth in it, but it’s mostly an attempt to describe the essentially emotional and social process of currency creation with the language of cold individual rationality.<o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><br /></div><h3 style="text-align: justify;"><b><span lang="EN-US">Tin-man currencies ain’t got no heart</span></b></h3><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US">This thinking has subsequently influenced the way that a lot of alternative crypto-coins have attempted to market themselves. Rather than embracing their own absurdity, many alt-coins have marketed their efficiency, their security, or their application to some specialist use case, as if the usefulness and competitiveness of the design was the most important aspect of why a person accepts a currency.<o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><a href="http://2.bp.blogspot.com/_ulxygaqurII/RoloRDWep3I/AAAAAAAAALQ/buNXXRdpVBE/s320/I+IS+SERIOUS+BUSINESSMAN+THIS+IS+SERIOUS+BUSINESS.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="300" src="https://2.bp.blogspot.com/_ulxygaqurII/RoloRDWep3I/AAAAAAAAALQ/buNXXRdpVBE/s320/I+IS+SERIOUS+BUSINESSMAN+THIS+IS+SERIOUS+BUSINESS.jpg" width="400" /></a></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US"><br /></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US">The crypto-conference has thus become the realm of ‘serious people’ discussing ‘serious business’, not wishy-washing mysticism and emotion. They appeal to rational functionality, rather than <i>inspiring</i>people to use them. They are <i>techno-fetishistic</i>. A guy with a PowerPoint presentation calmly explains the business case for why his crypto-currency is valuable because it uses a state-of-the-art turbo hashing system, but <i>for fuck’s sake, tell me why I should BELIEVE in it!</i><o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US"><i><br /></i></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US">It’s true that this strategy has worked to some extent for some alt-coins like Lightcoin, Quarkcoin and Peercoin, which have gained some popularity based on design, but think about this question: <i>Why do you use British Pounds or Yen?</i> The answer to that is never, ‘because they’re well designed’, and neither is it ‘because I rationally see how useful it is for me to have a medium of exchange’, and neither is it ‘because I’m intimidated by the state and they force me to use it’. <o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US"><br /></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US">Our answer is mostly just ‘<i>because everyone else seems to use it and I was taught to use it</i>’. We are born into currencies just like we are born into languages, and we learn to use them in a social context. If you want to convince a person to accept ephemeral electronic records as a currency, you need a story for people to hold on to. You need <i>heart</i>.<o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><br /></div><h3 style="text-align: justify;"><b><span lang="EN-US">Dogecoin is a cult, and that’s how it should be</span></b></h3><div class="separator" style="clear: both; text-align: center;"><a href="http://3.bp.blogspot.com/-VPxVgaeuhzI/U-i50SxqcjI/AAAAAAAACP4/Ncbl5sGm0rw/s1600/Dogecoin+Genesis.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="202" src="https://3.bp.blogspot.com/-VPxVgaeuhzI/U-i50SxqcjI/AAAAAAAACP4/Ncbl5sGm0rw/s1600/Dogecoin+Genesis.jpg" width="500" /></a></div><div class="MsoNormal" style="text-align: justify;"><br />Which brings us to Dogecoin. I can believe in Dogecoin because it gives me something to believe in. It’s a direct appeal to irrationality, a direct appeal to transcend the banal world of individual utility calculation and submit to something hilariously absurd. It is, above all, a <i>cult</i>, and that is infinitely more attractive than any cold appeal to robust design.</div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US"><br /></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US">It is the peaceful, playful gaze of the Doge itself that is the mystical foundation of the currency. It doesn’t matter who invented it, because Dogecoin is not experienced as a narcissistic project of a particular person, and it’s the symbol itself that is the leader. The Doge is a figure without ego, with cross-cultural, cross-gender, and yes, even cross-species appeal. We can all get something from the gaze of the Shibu.<o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US"><br /></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US">This is reflected in the resultant community that has emerged around Dogecoin, people who refer to themselves as ‘shibes’ and give each other gifts of Doge. While the <a href="http://www.reddit.com/r/Bitcoin/">Bitcoin subreddit</a> has turned into a moshpit of aggressive trolling, <a href="http://www.reddit.com/r/dogecoin">Dogecoin forums</a> feel inclusive and accepting, cohering around a surreal world of esoteric slogans and acts of goodwill.<o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify;"><span lang="EN-US"><br /></span></div><div class="separator" style="clear: both; text-align: justify;"></div><div class="MsoNormal" style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="http://1.bp.blogspot.com/-Lzi84K_l7ds/U-drkNaZjkI/AAAAAAAACPo/3NTSqw4gEpg/s1600/Dogecoin+Mag.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="400" src="https://1.bp.blogspot.com/-Lzi84K_l7ds/U-drkNaZjkI/AAAAAAAACPo/3NTSqw4gEpg/s1600/Dogecoin+Mag.jpg" width="300" /></a></div><span lang="EN-US"><br /></span><span lang="EN-US">In closing then, a word on design. If there has ever been any clever <i>design</i> in Dogecoin, it’s been in the way the core members have focused on creating a culture from the bottom-up, rather than fetishising currency creation as a technical <a href="http://en.wiktionary.org/wiki/solutionism">solution</a> to be marketed from above. The Dogecoin community has grown rapidly in response to community acts that establish a reason to believe in the currency, such as the sponsorship of underdogs like the Jamaican bobsleigh team, and oddball stunts like backing a Nascar racer.&nbsp;</span><br /><span lang="EN-US"><br /></span><span lang="EN-US">These are things you can sit in a pub and laugh about, outside conference halls, and that makes all the difference.<o:p></o:p></span><br /><br /></div><hr /><h3 style="text-align: left;"></h3><h3 style="text-align: left;">Some things to do if you enjoyed this article...</h3><div>I sometimes spend weeks writing these articles, and don't generally get paid to do it, so if you enjoyed please consider doing one or two of the following</div><br /><ol style="text-align: left;"><li>Doge donation: 4 donashuns plz send luv to DMiqDUR1hzMRFiKRUVuqGqwP7bh2HzVMuZ</li><li>Support by <a href="http://suitpossum.blogspot.co.uk/p/support.html">buying me a virtual beer</a></li><li>Tweet: You can&nbsp;<a href="https://twitter.com/intent/tweet?url=http%3A%2F%2Fsuitpossum.blogspot.com%2F2014%2F08%2Fwhy-i-buy-into-Dogecoin.html%3Fspref%3Dtw&amp;text=The%20Heretic%27s%20Guide%20to%20Global%20Finance%3A%20Hacking%20the%20Future%20of%20Money%3A%20Much%20soul%2C%20very%20emotion%3A%20Why%20I%20buy%20into%20the%20cult%20o...&amp;original_referer=http%3A%2F%2Fsuitpossum.blogspot.co.uk%2F2014%2F08%2Fwhy-i-buy-into-Dogecoin.html">tweet it out</a>!</li><li>Share it on your Facebook wall <a href="https://www.facebook.com/sharer/sharer.php?u=http%3A%2F%2Fsuitpossum.blogspot.com%2F2014%2F08%2Fwhy-i-buy-into-Dogecoin.html%3Fspref%3Dfb&amp;t=The+Heretic%27s+Guide+to+Global+Finance%3A+Hacking+the+Future+of+Money%3A+Much+soul%2C+very+emotion%3A+Why+I+buy+into+the+cult+o...">here</a></li><li>Email it to one friend from&nbsp;<a href="https://www.blogger.com/email-post.g?blogID=6454624189383327908&amp;postID=7105592321253784239">here</a></li><li>Leave a comment!</li><li>Submit to <a href="http://www.reddit.com/">Reddit</a></li><li>Link to the article from your own blog so your readers can see it too</li></ol><br /><div class="separator" style="clear: both; text-align: center;"></div><br /></div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/gkZuVCPTdbs" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com7http://suitpossum.blogspot.com/2014/08/why-i-buy-into-Dogecoin.htmltag:blogger.com,1999:blog-6454624189383327908.post-28521597946987357212014-07-17T21:28:00.000+01:002016-12-22T19:08:56.705+00:00Breaching the monetary Matrix: Five exercises to help you understand money<div dir="ltr" style="text-align: left;" trbidi="on"><div class="separator" style="clear: both; text-align: center;"><a href="http://3.bp.blogspot.com/-yLn8wZwwvfU/U71omyd9BSI/AAAAAAAACME/8U0nJEmbK6E/s1600/BluePillRedPill.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="210" src="https://3.bp.blogspot.com/-yLn8wZwwvfU/U71omyd9BSI/AAAAAAAACME/8U0nJEmbK6E/s1600/BluePillRedPill.jpg" width="500" /></a></div><div><div style="text-align: left;"><br /></div><hr /><div style="text-align: left;"><div style="text-align: justify;">(Note: I originally wrote this article for the July 2014 edition of <a href="https://www.contributoria.com/issue/2014-07/537ba3c700001df05c000026">Contributoria</a>, and it is republished here under the following&nbsp;<a href="https://creativecommons.org/licenses/by-nc/4.0/">Creative Commons</a> licence. If you wish to use the article, please attribute the original)</div><hr /><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><i>"Like everyone else you were born into bondage, born into a prison that you cannot smell or taste or touch, a prison for your mind."</i></div></div><div style="text-align: left;"><br /></div></div><div style="text-align: justify;">This is a line from <i>The Matrix</i>. Morpheus is <a href="https://www.youtube.com/watch?v=zE7PKRjrid4">explaining to Neo</a> that he’s actually stuck in a nightmare prison-world enslaved to computers. <i>The world is not as you think Neo, but I can set you free, provided you take the <a href="http://en.wikipedia.org/wiki/Red_pill_and_blue_pill">red pill</a></i>.</div><br /><div style="text-align: justify;">In some ways Morpheus resembles one of those single-agenda zealots who goes around telling people that they have a certain secret truth that will liberate them, like the guy who corners you in a pub and says, “Don’t you realise we’re trapped in a corporate prison. The Bilderberg Group owns the world’s governments!”</div><br /><div style="text-align: justify;">Morpheus, however, is also different to the average conspiracy theorist. The key dynamic in <i>The Matrix</i> is that the power structure he’s trying to reveal is invisible in all ways, an immersive totality that transcends the world of identifiable ‘things’. He spins no tales of illuminati hiding in Goldman Sachs, or secret meetings between elites in Swiss cantons.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The problem with the average conspiracy theorist is that their targets – such as corporations – are too obvious. Corporations may be giant, semi-immortal entities that vaguely resemble autonomous hive-minds bent on cultural hegemony, but they often do it bluntly, pushing cheesy propaganda and brandishing gadgets at us, lobbying politicians, and so on. In the end, there are ways for people to exert influence over them, and they occasionally disintegrate. Corporate power is subtle, but not that subtle.</div><div style="text-align: justify;"><br /><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="http://lesmoutonsenrages.fr/wp-content/uploads/2014/06/stock-footage-money-matrix.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="278" src="https://lesmoutonsenrages.fr/wp-content/uploads/2014/06/stock-footage-money-matrix.jpg" width="500" /></a></div><br /></div><div style="text-align: justify;">If anything in the world actually resembles Morpheus’ conspiracy, I’d say it is <i>money</i> itself. Money is extremely subtle. We think of the monetary system like we think of air, or language – as something that surrounds us and that we take for granted. We are born into a monetary system we cannot smell, or taste, or touch, so obviously normal as to be virtually invisible.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Indeed, when we’re asked to describe money, we often give fuzzy, imprecise descriptions, despite the fact that we may use it every day. Even those who work in the financial sector, and who spend all their time designing financial instruments like bonds to steer money from one place to another, frequently cannot tell you precisely what money is. Take, for example, the anti-hero of <a href="https://www.youtube.com/watch?v=iszwuX1AK6A">The Wolf of Wall Street</a>, a hotshot broker immersed in money, but who literally has no idea of what it is, and what’s more, is controlled by it like a puppet.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">I find money intensely mysterious, and there are no Matrix-style red pills that can be taken to help one deconstruct it. In August 2013 I published a piece called <a href="http://aeon.co/magazine/living-together/so-you-want-to-invent-your-own-currency/">Riches Beyond Belief</a> in Aeon Magazine, exploring the cultural dynamics of currency. Following that, it occurred to me that it would be useful to develop some more practical exercises and thought experiments to try stimulate thought about particular aspects of the monetary mystery. This article introduces five of those exercises, and I hope that collectively they may help you develop your own ideas. I’ve set them out in a particular order, but you can jump to those that interest you most.</div><br /><br /><h3 style="text-align: left;">Exercise No. 1: The web of value</h3><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><br /><div style="text-align: justify;">This first exercise is a warm up, aimed at situating money relative to other goods. Look around you and try locate a few objects in your immediate vicinity. Perhaps you’re sitting at a desk, and there is a decent Casio scientific calculator, a Parker ballpoint pen, a bottle of Jack Daniels, and an A4 note pad. You’ll also need to have one foreign bank note, and one local bank note.</div><div style="text-align: justify;"><br /></div><h4 style="text-align: justify;"><i>The challenge, part 1</i></h4><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Pick two of the objects, for example, the calculator and the Parker pen. Your task is to work out a rough <i>exchange ratio</i> between them. How many pens is the calculator worth?</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">You don’t have to work out an exact ratio, but aim to create a <i>band</i> of likely exchange ratios, testing the outer bounds of plausibility. The calculator is not likely to be worth 10 000 pens, for example, but it’s probably likely to be worth more than 1 pen. Perhaps you say the calculator is roughly worth 4-7 pens, depending on the situation and their relative quality.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">You’ll note that you have an intuitive, almost subconscious ability to assess one object relative to another, even if it’s only in very rough terms. What precisely is it about the objects that allows you to make the comparison? Perhaps it’s their perceived <a href="http://en.wikipedia.org/wiki/Utility">utility</a> (<i>‘the calculator can undertake more complex actions that the pen, and it lasts longer’</i>), or perhaps it's the imagined difficulty in creating the objects ourselves (<i>‘the calculator seems to have more complex technology built into it, and is harder to make, requiring more physical or intellectual <a href="http://en.wikipedia.org/wiki/Labor_theory_of_value">labour</a>’</i>). Perhaps it’s just due to some learned perception of the value (<i>‘Parker is a good ballpoint brand isn’t it?’</i>), or some combination of those factors.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Now that you’ve established one exchange ratio, add another. How many note pads is your bottle of Jack Daniels worth? You will find that these exchange ratios fluctuate even with yourself, depending on what time of day it is and your mood or situation. That won’t stop you being able to make a rough band though: <i>‘It’s unlikely that I’ll ever exchange a bottle of Jack Daniels for just one note pad, surely it’s worth at least three, but I’d never exchange 200 note pads for a bottle.’</i></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Now create a third exchange ratio, perhaps between the ballpoint pen and the notepad. In doing this, you’re building up a rough <i>network</i> of exchange values, and theoretically there should be some coherence between your perceptions. If roughly 4 good quality pens are exchangeable for a decent calculator, and roughly 3 standard notepads are exchangeable for a good quality pen, it is implied that roughly 12 standard notepads are equal to the calculator. Does that seem plausible to you, or do your perceptions of value have some inconsistencies?</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">(As a side note, you’ll probably find that your perception of value gets warped by scale, leading to certain inconsistencies. The perceived utility of any object tends to diminish with increased scale, a phenomenon economists call ‘diminishing marginal utility’. For example, you may be able to conceptualise the usefulness that three pens have to you, but it’s probably difficult to conceptualise the usefulness of say, 3000 pens)</div><div style="text-align: justify;"><br /></div><h4 style="text-align: justify;"><i>The challenge, part 2</i></h4><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Let’s now assume you’ve developed a loose latticework, something like a spider’s web, of these object pairs and the exchange ratios between them. Now take a <i>foreign bank note</i>, a currency that you’re not used to using, and try to integrate it into the network. How many pens would you exchange for 50 Turkish Lira?</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Notice something strange? We have some internal intuitive sense that guides us when making a rough comparison between two objects, but there is nothing about a foreign bank note that allows us to make a similar comparison. The truth is that you probably have no idea about how much a Turkish Lira is worth, unless you are from Turkey.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">This is something that tourists frequently experience, holding a strange foreign currency in their hands, having little idea of what it should be exchangeable for. What actually happens when you are a tourist? You <i>learn</i> what the currency is worth by observing others and by experience. You slowly <i>calibrate</i> your sense of its worth by seeing examples of goods priced in it.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Now, by way of contrast, take a currency you’re familiar with, perhaps the British Pound, and integrate it into the network. You’ll find that you already have a set of <i>pre-established</i> ideas about the exchange ratios between British Pounds and the various goods. <i>Oh, Jack Daniels is worth about £15 isn’t it?</i> A good quality ballpoint pen is worth maybe £8. An A4 notepad is probably around £3. A scientific calculator is maybe £30-40. Take a look at the ratios between these prices. Do they correspond to the ratios you established in the first part of the challenge?</div><div style="text-align: justify;"><br /></div><h4 style="text-align: justify;">Discussion</h4><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The point of this is to highlight that the value of modern currency cannot be thought of independently of the economy and people it is connected to. There is nothing about a British Pound <i>in itself</i> that can tell you how many pens it is worth, but once it is installed at the centre of a giant interconnected social network of goods and services, its value gets locked in – at least in part – by that <i>positioning</i>. It becomes like a hub connected to millions of <a href="https://www.sciencenews.org/sites/default/files/14478">spokes</a>, serving almost as a <a href="http://en.wikipedia.org/wiki/Routing">routing</a> mechanism between them. It cannot exist without them, but also gets much strength from its centrality.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Consider this statement: <i>‘If bread is worth £1.50 then I’m certainly not paying £10 for a cup of coffee.’</i> This emerges not from any comparison between Pounds and the goods, but from a known relationship between bread and coffee, expressed via Pounds. In theory then, whether we start off by pricing coffee as £2.50 or £250 doesn’t matter. The absolute numeric value in itself is arbitrary. What matters is whether that in turn plausibly corresponds to the prices of other goods.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The tendency to fetishise the numeric value is one reason why some people fall into the trap of thinking that because 1 British Pound is worth 173 Japanese Yen, the Pound must therefore be worth ‘more’ than the Yen. All it really means is that the starting point of measuring goods in the different countries is different, and when you first arrive in a foreign country, you have to learn the dynamics of the measuring system before you can start to measure goods in it. Thus, in much the same way that choosing to measure something in millimetres rather than centimetres will give you a higher number, the shirt you buy in Japan will display a higher numeric price, but <i>relative</i> to other goods in Japan may present a picture very similar to that in the UK.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Different currencies thus have different baseline <a href="http://en.wikipedia.org/wiki/Price_index">price levels</a>. The concept of ‘inflation’ refers to a general change in this baseline, one in which the measurement units become smaller over time, while the ratios between the goods being measured might stay roughly the same. Thus the ratio of £1.50 to £2.50 for bread to coffee becomes £3 to £5 over time. Societies that uphold any currency seem to accept the gradual overall shift as normal, provided it doesn't destabilise the intricate network of relative prices anchored and enmeshed in popular consciousness (most contentious is normally the wage prices that have an unfortunate tendency to stay fixed while overall goods prices rise, leading to worker outrage).</div><div style="text-align: justify;"><br /></div><br /><h3 style="text-align: left;">Exercise No. 2: Treasure Island</h3><div class="separator" style="clear: both; text-align: center;"><a href="http://fc03.deviantart.net/fs16/f/2007/221/5/3/Treasure_Island_by_andrewmacc.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="330" src="https://fc03.deviantart.net/fs16/f/2007/221/5/3/Treasure_Island_by_andrewmacc.jpg" width="500" /></a></div><br /><div style="text-align: justify;">Some people get concerned by the lack of intrinsic value in the fiat currency described above (<i>It’s not backed by anything!</i>) and instead advocate commodity-based currencies, currencies that are supposed to be valuable in themselves. Gold is the traditional candidate for this, so here is a simple thought experiment to shake up some preconceived notions about the shiny metal.</div><div style="text-align: justify;"><br /></div><h4 style="text-align: justify;">The setting</h4><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Imagine a large island. It has a sizable population, perhaps 50 000 people, but it’s extremely remote and cut off from any trade or contact with the outside world. There is a rich agricultural system built on fertile volcanic soils. There is a good source of energy in the form of underground coal mines. There are ample building materials in the form of timber to build houses. These resources form the basis for a vibrant island economy.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">It also so happens that once upon a time, a Spanish raider ship full of gold pieces got blown off course and floated for months before being wrecked upon the island, depositing its a huge stash of treasure. A hundred years later and these gold doubloons have come to form the basis of an island monetary system. They circulate in everyday trade, but a sizable percentage is held by a handful of powerful barons who mostly hoard it in hillside bunkers on the central volcanic cone that overlooks the island.</div><div style="text-align: justify;"><br /></div><h4 style="text-align: justify;">The scenario</h4><div style="text-align: justify;"><br /></div><div style="text-align: justify;">One day the island is hit by a giant hurricane and a tidal wave. 80 percent of the fertile topsoil is washed away, or else soaked with saline water that crops cannot grow in. The coal mines are flooded too, making them largely inaccessible. The trees are broken by the winds. In short, the basis for vibrant economic production is decimated. People are forced to eke out a rough subsistence foraging, or take to the seas in flimsy rafts hoping to find new lands far away.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The powerful barons though, still have their fortified bunkers full of gold on top of the hills.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">A question, then. Are the barons still wealthy?</div><div style="text-align: justify;"><br /></div><h4 style="text-align: justify;">Discussion</h4><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The point of this exercise is to pinpoint where you think wealth is found in society. It is often claimed that gold is a ‘store’ of wealth. In the aftermath of such a storm though, sitting atop the hill, one wonders in what sense any value is stored in the pieces of inert metal that have no immediate utility to the barons. The barons can try to exchange their gold for things, but given the context, are people really going to give away their few precious useful items for pieces of metal?</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">For much of history, gold has not had much obvious utility value like coal or timber or food might. Ironically, it tends to have most value in situations where it is <i>exchangeable</i>, and it is only exchangeable when there is a general surplus of goods that people need to exchange, and a process of mystification in which elites have imbued the metal with a god-like cultural status. This observation was very apparent to the likes of Adam Smith, who, in <i>The Wealth of Nations</i>, noted that:</div><blockquote class="tr_bq" style="text-align: justify;">‘the poor inhabitants of Cuba and St. Domingo, when they were first discovered by the Spaniards, used to wear little bits of gold as ornaments in their hair and other parts of their dress. They seemed to value them as we would do any little pebbles of somewhat more than ordinary beauty, and to consider them as just worth the picking up, but not worth the refusing to anybody who asked them. They gave them to their new guests at the first request, without seeming to think that they had made them any very valuable present. They were astonished to observe the rage of the Spaniards to obtain them; and had no notion that there could anywhere be a country in which many people had the disposal of so great a superfluity of food; so scanty always among themselves, that, for a very small quantity of those glittering baubles, they would willingly give as much as might maintain a whole family for many years.’</blockquote><div style="text-align: justify;"><br /></div><div style="text-align: justify;">In other words, according to Smith, gold is only valuable in a society where there already are large economic resources built up. Outside of that context, it’s a largely useless decorative item.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Gold thus only ‘stores’ value insofar as it finds itself within a society that upholds a social agreement that it can be exchanged for goods outside of itself that have actual value. In other words, it <i>derives</i> most of its value, or is <i>imbued</i> with value (via a cultural-political process of mystification), from being present in situations where there are large networks of traded useful goods and people who require a medium of exchange. In essence it holds a contingent form of latent or potential exchange value. If the social agreement breaks down, or if the underlying goods disappear, the value of gold largely disappears too, or reverts to its more humble ‘intrinsic’ value of pretty decoration.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">To illustrate this once more, let’s imagine the scenario in reverse. Imagine years later you find yourself stranded on this island, now long since abandoned and desolate. You stumble upon the bunkers of gold in the hills. Should you be happy? Perhaps, but only if you’re able to tap into a larger trade network that exists somewhere outside the island. Otherwise, if you want to re-mystify it, you’d better get to work rebuilding a new vibrant island society so that the gold returns to being a ‘valuable’ medium of exchange.</div><div style="text-align: justify;"><br /></div><h4 style="text-align: justify;">Intrinsic value: Utility vs. labour</h4><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Gold fetishists frequently reject what I’ve just said, absolutely convinced that the metal is the ideal form of money because it is scarce whilst having intrinsic value. It sounds superficially plausible, but think about this question: <i>What really happens if something is an intrinsic store of value and is scarce at the same time?</i></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Let’s say <a href="http://en.wikipedia.org/wiki/Rare_earth_element">rare earth metals</a> for example. Rare earth metals are very scarce, and they are very useful in modern high tech electronics. Does that make them the ideal candidate for being the ultimate form of money? While it’s true that they hold value, it’s also likely that they would soon disappear out of circulation to be used in the things that we normally use them for, like mobile phone parts. The problem about a scarce commodity that is also very useful is that it generally won’t circulate like a currency because people <i>consume</i> it.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Gold doesn’t suffer from this problem because historically it’s not actually been that useful, which is why it can sit in vaults for so long without being sold off for industrial usage. Bitcoin is a more recent example of this, a mystified electronic token that you cannot do anything with <i>in itself</i>, thereby making it strangely useful as a potential means of exchange.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Where gold does differ from fiat currency is in the fact that gold requires labour to create (mining). This does give it a psychological edge in maintaining the appearance of holding value in itself (<i>‘We wouldn’t be mining this if it wasn’t valuable would we?’</i>). Labour implies scarcity, in that you don’t have to work for things that are abundant, and scarcity in turn implies potential for exchange value (sunlight might have infinite use value, but no exchange value because it is everywhere and abundant).</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Fiat currency doesn’t seem to require labour to create, and yet does this matter? You might say ‘the British Pound is backed by nothing’, and yet I’m inclined to say ‘Well, nothing apart a network of 63 million people in a productive economy who will accept it, a powerful state, and a banking system with a huge vested interest in keeping it that way. Is it really ‘weaker’ than gold?’</div><br /><br /><h3 style="text-align: left;">Exercise No. 3: Exiled from Main Street</h3><div class="separator" style="clear: both; text-align: center;"><a href="http://www.archfoundation.org/wp-content/uploads/2011/10/Image1_ChicagoGreenRoof_featured.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="240" src="https://www.archfoundation.org/wp-content/uploads/2011/10/Image1_ChicagoGreenRoof_featured.jpg" width="500" /></a></div><br /><div style="text-align: justify;">Here’s a thought-experiment to think about when you’re in a confined space with other people, perhaps your office block. Let’s say it’s a medium-sized building, and you are with 49 other people. For the sake of the thought-experiment, imagine that you have access to a large rooftop space, where there is a rooftop gardening system.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Now let’s imagine that – for whatever reason – all your wallets are taken away as you enter the building, that the doors are then locked, and that the building is then cut off from the outside world. You find yourselves trapped in the space for several months without any access to money.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The question, then. Has your wealth disappeared?</div><div style="text-align: justify;"><br /></div><h4 style="text-align: justify;">Discussion</h4><div style="text-align: justify;"><br /></div><div style="text-align: justify;">What has effectively happened in this situation is that you’ve been exiled from a broader economy, and placed into a much smaller one, consisting of only 50 people and a small set of resources. You thus find yourself in the very situation that many small-scale communities have found themselves in over the course of history.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">In the isolated space of that building, your wealth does not lie in your bank account. In the context of being in the same boat together, your wealth lies in the potential resources available, and in the collective labour and ingenuity that people can bring to bear in obtaining them. Perhaps some people in the building put effort into creating water tanks to capture rain, while others work on the rooftop farm. Some tend to those who are sick, and some create entertaining acts to lighten the mood and improve wellbeing.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Collective human labour might be required to get all the resources necessary for the society to survive, but human labour is situated in individual people, and thus informal systems of ‘keeping score’ emerge in such a society. <i>I did the cooking, can you do the washing later?</i> This gets called ‘reciprocity’. It’s the idea that, provided you’re able to, you’ll pull your weight over time. And if you don’t, people will start to get pissed off with you and try to exclude you from the communal resources.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">A healthy system of reciprocity tends to both rely upon and create systems of trust (like the way your local pub landlord might allow you to keep an informal tab based on trusting you). If you so wish, though, you can begin to formalise this reciprocity by explicitly writing down people’s obligations on a collective ledger or list, perhaps a central whiteboard in the building.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Maybe you can even try to quantify the work done, perhaps in terms of hours. I did 5 hours of work on rooftop farming. I thereby claim credit for 5 hours, and it’s written down on the ledger so everyone knows. In essence, that ledger entry is now a <i>claim</i> on the product of the collective labour of the group. My personal ‘wealth’ may come to lie in the recognition that others in the building will pay to that claim, and in their acknowledgement that I ‘own’ it.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Now imagine taking that claim to 5 hours of the society’s labour, currently written up on the whiteboard, and writing it down instead on a piece of paper that can be passed around, traded and owned.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Wait a moment, isn’t that just normal paper currency?</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><h3 style="text-align: left;">Exercise No. 4: Cracking the commodity illusion of credit money</h3><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://encrypted-tbn2.gstatic.com/images?q=tbn:ANd9GcRTyqrsabOnuWZgHVrzIBK4WMa6S-vJufIpoOAKAEwRS3340dWPuw" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="210" src="https://encrypted-tbn2.gstatic.com/images?q=tbn:ANd9GcRTyqrsabOnuWZgHVrzIBK4WMa6S-vJufIpoOAKAEwRS3340dWPuw" width="500" /></a></div><br /><div style="text-align: justify;">Note what just happened in the exercise above. A ledger entry – essentially a claim backed by a community – was turned into an <i>object</i> by being written down on a piece of paper that can be owned, and subsequently traded. Our ability to imagine that social (or perhaps political) claim as an object that can be owned, and our subsequent ability to exchange it for an actual good, allows us to imagine monetary transactions as if it were akin to exchanging two commodities.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">This imagined physicality of money is perhaps what allows people to believe that it is a ‘store of value’. For something to be a store of value it must be physical right? Even the term ‘money’ sounds physical, a noun used to describe an object, rather than a verb used to describe a process. Here’s an exercise to help destabilise that.</div><div style="text-align: justify;"><br /></div><h4 style="text-align: justify;"><i>The challenge, part 1</i></h4><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Try to become aware of every time you mention the word ‘money’ in conversation, in thought, in emails, and in general.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Now, try to not use the word ‘money’ for a few days. Instead, every time you’re about to say it, insert into its place a description of its <i>form</i>. For example, when you hand over coins at a store, ask ‘is this enough little pieces of metal?’, and when you’re paying by card, ask ‘do you accept these electrons, travelling through wires?’ You’ll see the cashiers looking at you strangely, because in some sense you’re breaking a taboo by drawing <i>too much</i> attention to the material form of the money.</div><div style="text-align: justify;"><br /></div><h4 style="text-align: justify;"><i>The challenge, part 2</i></h4><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Now move to a description based not on money’s physical manifestation, but rather on what it can achieve. Regardless of your perception of what money is, we know that you can use it to <i>claim goods and services within a certain geographical boundary</i>. You go into a shop, take out a note, and claim a sandwich, and in so doing pass the claim to someone else.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">So try this for a few days. When you see a person driving in a Lamborghini, and you’re about to say ‘that person must have loads of money’, you instead say ‘that person must have loads of claims on goods and services’. When you're borrowing cash from a friend, say, 'hey, do you have some claims on goods and services I can use?' It sounds a bit silly perhaps, but the words are breaking away from the physical form, and instead referencing money to things external to itself. In so doing you are actually pointing out its position in the centre of a socio-economic network.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Of course, you don’t want to have to say ‘claim on goods and services’ all the time. I rather use the acronym COGAS (‘Claims On Goods And Services’). COGAS-UK is what I use for British Pounds, meaning ‘claims on goods and services within the geographic boundary of the United Kingdom’. It’s a claim I can use to draw on the productive power of the 63 million people who accept it. This might seem like a fairly small action, but naming money differently helps you to become aware of the immense cultural and political system that underpins its value.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><h3 style="text-align: left;">Exercise No. 5: Fractional electronics</h3><div class="separator" style="clear: both; text-align: center;"><a href="http://www.twlvoiceanddata.co.uk/wp-content/uploads/2013/08/Fibre.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="280" src="https://www.twlvoiceanddata.co.uk/wp-content/uploads/2013/08/Fibre.jpg" width="500" /></a></div><br /><div style="text-align: justify;">There’s one big elephant that’s left in the room. All the above exercises are aimed at trying to focus in on what money might be to us. This though, is a different question to how money is actually <i>created</i> in modern society. The question ‘how is money created’ is different from the question ‘what is money’, in much in the way that the question ‘how is art created’ is different to ‘what is art’. Monetary reform groups like <a href="http://www.positivemoney.org/">Positive Money</a> deal with the question of ‘how is money created’ rather than ‘what is it’, and this is a deep political issue. I left this for last because it’s often an issue that distracts people from thinking about the more basic social nature of money, which is required before the creation process can occur.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">This exercise really just involves reflecting on three questions:</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">1) What form does the money in your bank account take?</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">2) If you were really depositing it into the bank so that they can then lend it out to others, how come it’s still there for you to get?</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">3) If the bank suddenly took it away from you, would you have legal recourse against them? (e.g. if you woke up to find that Barclays had eliminated your bank account and the money in it, would you be able to sue them?)</div><div style="text-align: justify;"><br /></div><h4 style="text-align: justify;">Discussion</h4><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The money in your bank account is electronic money, which is to say that it is simply a ledger entry stored in the huge datacentres of commercial banks (imagine huge excel spreadsheets recording account numbers and how much is attributable to each one). They could do the same thing in a <a href="https://pbs.twimg.com/media/BqRPwKRCIAEDcmn.jpg:large">giant book</a> if they wanted to – and that is what banks used to do – but electronic ledgers are more efficient, a digital equivalent to the clerks who used to carefully write down how much people deposited, and how much was given out to those who the bank granted loans to.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Now to the second question. Textbooks often claim that banks take deposits and then lend them out to people, but if that were entirely true then your deposits would not be sitting there waiting for you would they? How is it that you can have access to your money when it’s ostensibly being lent out to others?</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">This is where we get into the realm of <a href="http://en.wikipedia.org/wiki/Fractional_reserve_banking">fractional reserve banking</a>, the process whereby commercial banks take the base money created by the central bank (technically called M0, which includes the physical cash you may carry around) and amplify (or multiply) it by extending credit greater than the initial deposits they're given, thereby creating new money that exists nowhere else except as an entry in their accounting system (technically called <a href="http://en.wikipedia.org/wiki/Money_supply#Fractional-reserve_banking">M1-M3</a>). Indeed, electronic money does not exist outside of the banks’ IT systems, but it is the main form of money we use in society, claims which can be passed around, but that cannot leave the system.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Sometimes people are bewildered by the notion that ‘commercial banks create money’. It seems to make it sound like they can create it and destroy it at will. If you have money in a Barclays account though, recorded as a data entry in their IT system, they cannot just take it away from you. It might have originally been created via the process of bank lending, but once it’s released as a legal claim into society, it cannot just be destroyed, any more than an artist can suddenly make an artwork disappear once you’ve got it hanging on your wall. There is a legally-backed reality to the money once its created, and this provides a check against complete surreality of the money supply.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The fundamental nature of the claim that you now own is precisely what we’ve discussed in the earlier sections – a social claim that has value insofar as people will accept it in exchange for goods and services. This would not be any different if the government or god or your neighbour George was creating the money. The politics of fractional reserve banking sometimes get cast as questions about the fundamental nature of money, but to me they are actually questions about whether letting private banks be primary creators of that money is responsible or fair, whether it will eventually undermine faith in currency, and whether it confers on them too much political power.</div><div style="text-align: justify;"><br /></div><br /><h3 style="text-align: left;">Red pill</h3><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="http://oi57.tinypic.com/2mhivcx.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="316" src="https://oi57.tinypic.com/2mhivcx.jpg" width="400" /></a></div><br /><div style="text-align: justify;">You’re in an electronic money world largely existing in the data centres of commercial banks, and held in place by collective consciousness and power. Whether you think there is anything wrong with that is really dependant on your view of reality. If you truly do believe that money is ‘supposed’ to be gold, and if you truly do believe that only gold has ‘intrinsic’ value, then you’re likely to shit yourself at the prospect of modern money. On the other hand, if you like me see money essentially as having always been a strange, somewhat irrational social contract, your mind should rather move to the political and psychological tradeoffs involved in different forms and creators of money, and the economic distribution effects of different variations on the monetary theme.</div><div style="text-align: justify;"><br /></div><h4 style="text-align: justify;">Further reading</h4><div style="text-align: justify;"><br /></div><div style="text-align: justify;">I hope these exercises have been useful, even if you don’t agree with my conclusions. If you want to go further down the rabbit hole, here is some potential further reading.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">My piece <a href="http://aeon.co/magazine/living-together/so-you-want-to-invent-your-own-currency/">Riches Beyond Belief</a> in Aeon Magazine was pretty popular and generated a lively discussion. It explores alternative currencies, and what they reveal about normal currency. If you want to look at how Bitcoin interacts with modern money, and the politics around that, check out my piece, <a href="http://www.e-ir.info/2014/06/01/visions-of-a-techno-leviathan-the-politics-of-the-bitcoin-blockchain/">Visions of a Techno-Leviathan: The Politics of the Bitcoin Blockchain</a>, which has also been pretty well received.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">For some serious reading, check out David Graeber’s <a href="http://en.wikipedia.org/wiki/Debt:_The_First_5000_Years"><i>Debt: The First 5000 Years</i></a>. It's is on its way to becoming a monetary classic. It’s very good at obliterating classical economic myths of barter as the origin of money, and pointing out the deeply intertwined relationship between money, debt, and money-as-debt. Adam Smith is the founder of the outdated myth of barter that Graeber dismantles, but it’s worth delving into Book 1 of the <i>Wealth of Nations</i> to see his ambiguous treatment of gold as money, at once admitting that it’s a construct whilst trying to simultaneously claim that it actually is a bearer of intrinsic labour value. Another classical take comes from Karl Marx, who carries forward some of Adam Smith’s theories of commodity money in <i>Capital</i> (check out Ch.1), but who gets more sophisticated by pinpointing how the money form is locked into a network of other goods, and elevated by them, taking on a certain mystical status.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">From that point monetary theories have abounded, but I'd recommend trying to read anthropologists and psychologists rather than the bland rationalistic explanations of the mainstream economics profession. Above all though, the real red pill takes the form of undertaking your own explorations of money, exploring its orthodox and unorthodox forms, and cracking the deceptive shell that society cloaks it in.<br /><br /><br /><hr /><h3>If you enjoyed this article, please consider...</h3>I sometimes spend weeks writing these articles, and don't generally get paid to do it, so if you enjoyed please consider doing one or two of the following:<br /><br /><ol><li>Buy me a <a href="http://suitpossum.blogspot.ie/p/support.html">virtual beer</a>!</li><li>Tweet: You can tweet it out <a href="https://twitter.com/intent/tweet?url=http%3A%2F%2Fsuitpossum.blogspot.com%2F2014%2F07%2Funderstand-money.html%3Fspref%3Dtw&amp;text=The%20Heretic%27s%20Guide%20to%20Global%20Finance%3A%20Hacking%20the%20Future%20of%20Money%3A%20Breaching%20the%20monetary%20Matrix%3A%20Five%20exercises%20to%20h...&amp;original_referer=http%3A%2F%2Fsuitpossum.blogspot.co.uk%2F2014%2F07%2Funderstand-money.html">here</a></li><li>Share it on your Facebook wall <a href="http://www.blogger.com/share-post.g?blogID=6454624189383327908&amp;postID=2852159794698735721&amp;target=facebook">here</a>&nbsp;</li><li>Email it to one friend from <a href="https://www.blogger.com/email-post.g?blogID=6454624189383327908&amp;postID=2852159794698735721">here</a>&nbsp;</li><li>Leave a comment!&nbsp;</li><li>Submit to <a href="http://www.reddit.com/">Reddit</a>&nbsp;</li><li>Link to the article from your own blog so your readers can see it too</li></ol><div>Cheers!</div></div></div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/nlbkyhfcLS4" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com9http://suitpossum.blogspot.com/2014/07/understand-money.htmltag:blogger.com,1999:blog-6454624189383327908.post-14613588959928388672014-06-03T11:03:00.000+01:002016-04-18T10:29:02.180+01:00Visions of a techno-leviathan: The politics of the Bitcoin blockchain<div dir="ltr" style="text-align: left;" trbidi="on"><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="https://2.bp.blogspot.com/-kRm6hsiKjBE/VxSor701SOI/AAAAAAAAC4o/iKXqd1LaKXsASOzVkL70LOIMYq92ZTqOgCLcB/s1600/HobbesLeviathan.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="287" src="https://2.bp.blogspot.com/-kRm6hsiKjBE/VxSor701SOI/AAAAAAAAC4o/iKXqd1LaKXsASOzVkL70LOIMYq92ZTqOgCLcB/s400/HobbesLeviathan.jpg" width="500" /></a></div><br /><hr />(Please note that I originally wrote this essay for <a href="http://www.e-ir.info/2014/06/01/visions-of-a-techno-leviathan-the-politics-of-the-bitcoin-blockchain/">E-International Relations</a>, and I have republished it here on a Creative Commons licence. If you wish to republish this piece, please respect E-IR's <a href="http://www.e-ir.info/reference/">republishing guidelines</a>) <br /><hr /><br /><div style="text-align: justify;">In Kim Stanley Robinson’s epic 1993 sci-fi novel <i>Red Mars</i>, a pioneering group of scientists establish a colony on Mars. Some imagine it as a chance for a new life, run on entirely different principles from the chaotic Earth. Over time, though, the illusion is shattered as multinational corporations operating under the banner of governments move in, viewing Mars as nothing but an extension to business-as-usual.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">It is a story that undoubtedly resonates with some members of the Bitcoin community. The vision of a free-floating digital cryptocurrency economy, divorced from the politics of colossal banks and aggressive governments, is under threat. Take, for example, the purists at <a href="https://www.indiegogo.com/projects/bitcoin-dark-wallet">Dark Wallet</a>, accusing the <a href="https://bitcoinfoundation.org/">Bitcoin Foundation </a>of selling out to the regulators and the likes of the <a href="http://www.cnbc.com/id/101372209">Winklevoss Twins</a>.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Bitcoin sometimes appears akin to an illegal immigrant, trying to decide whether to seek out a rebellious existence in the black-market economy, or whether to don the slick clothes of the Silicon Valley establishment. The latter position – involving publicly accepting regulation and tax whilst privately lobbying against it – is obviously more acceptable and familiar to authorities.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Of course, any new scene is prone to developing internal echo chambers that amplify both commonalities and differences. While questions regarding Bitcoin’s regulatory status lead hyped-up cryptocurrency evangelists to engage in intense sectarian debates, to many onlookers Bitcoin is just a passing curiosity, a damp squib that will eventually suffer an ignoble death by media boredom. It is a mistake to believe that, though. The core innovation of Bitcoin is not going away, and it is deeper than currency.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">What has been introduced to the world is a method to create <i>decentralised peer-validated time-stamped ledgers</i>. That is a fancy way of saying it is a method for bypassing the use of centralised officials in recording stuff. Such officials are pervasive in society, from a bank that records electronic transactions between me and my landlord, to patent officers that record the date of new innovations, to parliamentary registers noting the passing of new legislative acts.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The most visible use of this technical accomplishment is in the realm of currency, though, so it is worth briefly explaining the <a href="http://suitpossum.blogspot.co.uk/2013/04/how-to-explain-bitcoin-to-your.html">basics of Bitcoin</a> in order to understand the political visions being unleashed as a result of it.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">The technical vision 1.0</h3><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="http://www.wired.com/wp-content/uploads/blogs/opinion/wp-content/uploads/2014/03/ethereum-bitcoin-ft.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://www.wired.com/wp-content/uploads/blogs/opinion/wp-content/uploads/2014/03/ethereum-bitcoin-ft.jpg" height="250" width="500" /></a></div><br /></div><div style="text-align: justify;">Banks are information intermediaries. Gone are the days of the merchant dumping a hoard of physical gold into the vaults for safekeeping. Nowadays, if you have ‘£350 in the bank’, it merely means the bank has recorded that for you in their <a href="http://www.datacomdesign.com/filesimages/Data%20Centers/10-Bank-of-America.jpg">data centre</a>, on a database that has your account number and a corresponding entry saying ‘350’ next to it. If you want to pay someone electronically, you essentially send a message to your bank, identifying yourself via a pin or card number, asking them to change that entry in their database and to inform the recipient’s bank to do the same with the recipient’s account.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Thus, commercial banks collectively act as a cartel controlling the recording of transaction data, and it is via this process that they keep score of ‘how much money’ we have. To create a secure electronic currency system that does not rely on these banks thus requires three interacting elements. Firstly, one needs to replace the private databases that are controlled by them. Secondly, one needs to provide a way for people to change the information on that database (‘move money around’). Thirdly, one needs to convince people that the units being moved around are worth something.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">To solve the first element, Bitcoin provides a public database, or ledger, that is referred to reverently as the blockchain. There is a way for people to submit information for recording in the ledger, but once it gets recorded, it cannot be edited in hindsight. If you’ve heard about bitcoin ‘mining’ (using ‘hashing algorithms’), that is what that is all about. A scattered collective of mercenary clerks essentially hire their computers out to collectively maintain the ledger, baking (or <a href="http://bitcoinmagazine.com/12311/weaving-better-metaphor-bitcoin-instead-mining/">weaving</a>) transaction records into it.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Secondly, Bitcoin has a process for individuals to identify themselves in order to submit transactions to those clerks to be recorded on that ledger. That is where public-key cryptography comes in. I have a public Bitcoin address (somewhat akin to my account number at a bank) and I then control that public address with a private key (a bit like I use my private pin number to associate myself with my bank account). This is what provides anonymity.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The result of these two elements, when put together, is the ability for anonymous individuals to record transactions between their bitcoin accounts on a database that is held and secured by a decentralised network of techno-clerks (‘miners’). As for the third element – convincing people that the units being transacted are worth something – that is a <a href="http://aeon.co/magazine/living-together/so-you-want-to-invent-your-own-currency/">more subtle question</a> entirely that I will not address here.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">The political vision 1.0</h3><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="http://www.compadre.org/Informal/images/features/network%20large.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://www.compadre.org/Informal/images/features/network%20large.jpg" height="350" width="500" /></a></div><br /></div><div style="text-align: justify;">Note the immediate political implications. Within the Bitcoin system, a set of powerful central intermediaries (the cartel of commercial banks, connected together via the central bank, underwritten by government), gets replaced with a more diffuse <i>network intermediary</i>, apparently controlled by no-one in particular.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">This generally appeals to people who wish to devolve power away from banks by introducing more diversity into the monetary system. Those with a left-wing anarchist bent, who perceive the state and banking sector as representing the same elite interests, may recognise in it the potential for collective direct democratic governance of currency. It has really appealed, though, to conservative libertarians who perceive it as a commodity-like currency, free from the evils of the central bank and regulation.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The corresponding political reaction from policy-makers and establishment types takes three immediate forms. Firstly, there are concerns about it being used for money laundering and crime (‘Bitcoin is the dark side’). Secondly, there are concerns about consumer protection (‘Bitcoin is full of cowboy operators’). Thirdly, there are concerns about tax (‘this allows people to evade tax’).</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The general status quo bias of regulators, who fixate on the negative potentials of Bitcoin whilst remaining blind to negatives in the current system, sets the stage for a political battle. Bitcoin enthusiasts, passionate about protecting the niche they have carved out, become prone to imagining conspiratorial scenes of threatened banks fretfully lobbying the government to ban Bitcoin, or of paranoid politicians panicking about the integrity of the national currency.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">The technical vision 2.0</h3><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="http://bitcoinmagazine.com/wp-content/uploads/2014/01/Screen-Shot-2014-01-21-at-4.03.11-PM.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://bitcoinmagazine.com/wp-content/uploads/2014/01/Screen-Shot-2014-01-21-at-4.03.11-PM.png" height="188" width="320" /></a></div><br /></div><div style="text-align: justify;">Outside the media hype around these Bitcoin dramas, though, a deeper movement is developing. It focuses not only on Bitcoin’s potential to disrupt commercial banks, but also on the more general potential for decentralised blockchains to disrupt other types of centralised information intermediaries.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><a href="http://www.copyright.gov/">Copyright authorities</a>, for example, record people’s claims to having produced a unique work at a unique date and authoritatively stamp it for them. Such centralised ‘timestamping’ more generally is called ‘notarisation’. One non-monetary function for a Bitcoin-style blockchain could thus be to replace the privately controlled ledger of the notary with a public ledger that people can record claims on. This is precisely what <a href="http://www.proofofexistence.com/">Proof of Existence</a> and <a href="http://www.originstamp.org/">Originstamp</a> are working on.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">And what about domain name system (DNS) registries that record web addresses? When you type in a URL like <a href="http://www.e-ir.info/">www.e-ir.info</a>, the browser first steers you to aDNS registry like <a href="http://www.info.info/about">Afilias</a>, which maintains a private database of URLs alongside information on which IP address to send you to. One can, however, use a blockchain to create a decentralised registry of domain name ownership, which is what <a href="http://www.coindesk.com/what-are-namecoins-and-bit-domains/">Namecoin</a> is doing. Theoretically, this process could be used to record share ownership, land ownership, or ownership in general (see, for example, <a href="http://www.mastercoin.org/">Mastercoin</a>’s projects).</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The biggest information intermediaries, though, are often hidden in plain sight. What is Facebook? Isn’t it just a company that you send information to, which is then stored in their database and subsequently displayed to you and your friends? You log in with your password (proving your identity), and then can alter that database by sending them further messages (‘I’d like to delete that photo’). Likewise with Twitter, Dropbox, and countless other web services.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div>Unlike the original internet, which was largely used for transmission of static content, we experience sites like Facebook as interactive playgrounds where we can use programmes installed in some far away computer. In the process of such interactivity, we give groups like Facebook huge amounts of information. Indeed, they set themselves up as <i>information <a href="http://www.oxforddictionaries.com/definition/english/honeytrap">honeytraps</a></i> in order to create a profit-making platform where advertisers can sell you things based on the information. This simultaneously creates a large information repository for authorities like the NSA to browse. This interaction of corporate power and state power is inextricably tied to the profitable nature of centrally held data.<br /><br /></div><div style="text-align: justify;">But what if you could create interactive web services that did not revolve around single information intermediaries like Facebook? That is precisely what groups like <a href="https://www.ethereum.org/">Ethereum</a> are working towards. Where Bitcoin is a way to record simple transaction information on a decentralised ledger, Ethereum wants to create a ‘decentralised computational engine’. This is a system for running programmes, or executing contracts, on a blockchain held in play via a distributed network of computers rather than Mark Zuckerberg’s data centres.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">It all starts to sounds quite sci-fi, but organisations like Ethereum are leading the charge on building ‘<a href="http://bitcoinmagazine.com/7050/bootstrapping-a-decentralized-autonomous-corporation-part-i/">Decentralised Autonomous Organisations</a>’, hardcoded entities that people can interact with, but that nobody in particular controls. I send information to this entity, triggering the code and setting in motion further actions. As <a href="http://bitshares.org/">Bitshares</a> describes it, such an organisation “has a business plan encoded in open source software that executes automatically in an entirely transparent and trustworthy manner.”</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">The political vision 2.0</h3><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="http://fc03.deviantart.net/fs70/f/2010/364/5/8/facebook_by_forgetfulrainn-d36106t.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://fc03.deviantart.net/fs70/f/2010/364/5/8/facebook_by_forgetfulrainn-d36106t.jpg" height="256" width="320" /></a></div><br /></div><div style="text-align: justify;">By removing a central point of control, decentralised systems based on code – whether they exist to move Bitcoin tokens around, store files, or build contracts – resemble self-contained robots. Mark Zuckerberg of Facebook or Jamie Dimon of JP Morgan Chase are human faces behind the digital interface of the services they run. They can overtly manipulate, or bow in to pressure to censor. A decentralised currency or a decentralised <a href="http://twister.net.co/">version of Twitter</a> seems immune from such manipulation.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">It is this that gives rise to a narrative of empowerment and, indeed, at first sight this offers an exhilarating vision of self-contained outposts of freedom within a world otherwise dominated by large corruptible institutions. At many cryptocurrency meet-ups, there is an excitable mix of techno-babble infused with social claims. The blockchain can record contracts between free individuals, and if enforcement mechanisms can be coded in to create self-enforcing ‘smart contracts’, we have a system for building encoded law that bypasses states.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Bitcoin and other blockchain technologies, though, are empowering right now precisely because they are underdogs. They introduce diversity into the existing system and thereby expand our range of tools. In the minds of hardcore proponents, though, blockchain technologies are more than this. They are a replacement system, superior to existing institutions in every possible way. When amplified to this extreme, though, the apparently utopian project can begin to take on a dystopian, conservative hue.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">Binary politics</h3><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="http://31.media.tumblr.com/tumblr_m72chtBCbv1r3gi71o1_500.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://31.media.tumblr.com/tumblr_m72chtBCbv1r3gi71o1_500.jpg" height="195" width="500" /></a></div><br /></div><div style="text-align: justify;">When asked about why Bitcoin is superior to other currencies, proponents often point to its ‘<a href="http://www.thebitcoinsociety.org/content/bitcoin-beauty-trustless-transactions"><i>trustless</i></a>‘ nature. No trust needs be placed in fallible ‘governments and corporations’. Rather, a self-sustaining system can be created by individuals following a set of rules that are set apart from human frailties or intervention. Such a system is assumed to be fairer by allowing people to win out against those powers who can abuse rules.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The vision thus is not one of bands of people getting together into mutualistic self-help <i>groups</i>. Rather, it is one of <i>individuals</i> acting as autonomous agents, operating via the hardcoded rules with other autonomous agents, thereby avoiding those who seek to harm their interests.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Note the underlying dim view of human nature. While anarchist philosophers often imagine alternative governance systems based on mutualistic community foundations, the ‘empowerment’ here does not stem from building community ties. Rather it is imagined to come from retreating from trust and taking refuge in a defensive individualism mediated via mathematical contractual law.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">It carries a certain disdain for human imperfection, particularly the imperfection of those in power, but by implication the imperfection of everyone in society. We need to be protected from ourselves by vesting power in lines of code that execute automatically. If only we can lift currency away from manipulation from the Federal Reserve. If only we can lift Wikipedia away from the corruptible Wikimedia Foundation.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Activists traditionally revel in hot-blooded asymmetric battles of interest (such as that between <a href="http://strikedebt.org/">StrikeDebt! </a>and the banks), implicitly holding an underlying faith in the redeemability of human-run institutions. The Bitcoin community, on the other hand, often seems attracted to a detached anti-politics, one in which action is reduced to the binary options of <i>Buy In</i> or <i>Buy Out</i> of the coded alternative. It echoes consumer notions of the world, where one ‘expresses’ oneself not via debate or negotiation, but by choosing one product over another. <i>We’re leaving Earth for Mars. Join if you want</i>.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">It all forms an odd, tense amalgam between visions of exuberant risk-taking freedom and visions of risk-averse anti-social paranoia. This ambiguity is not unique to cryptocurrency (see, for example, this excellent <a href="https://www.youtube.com/watch?v=z5Otla5157c">parody of the trustless society</a>), but in the case of Bitcoin, it is perhaps best exemplified by the narrative offered by Cody Wilson in Dark Wallet’s <a href="https://www.indiegogo.com/projects/bitcoin-dark-wallet">crowdfunding video</a>. “Bitcoin is what they fear it is, a way to leave… to make a choice. There’s a system approaching perfection, just in time for our disappearance, so, let there be dark”.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">The myth of political ‘exit’</h3><div style="text-align: justify;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://fc09.deviantart.net/fs23/i/2007/343/0/3/Rocket_launch_by_Baietu.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://fc09.deviantart.net/fs23/i/2007/343/0/3/Rocket_launch_by_Baietu.jpg" height="320" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">'SEE YOU LATER'</td></tr></tbody></table><br /></div><div style="text-align: justify;">But where exactly is this perfect system Wilson is disappearing to?</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Back in the days of roving bands of nomadic people, the political option of ‘exit’ was a reality. If a ruler was oppressive, you could actually pack up and take to the desert in a caravan. The bizarre thing about the concept of ‘exit to the internet’ is that the internet is a technology premised on massive state and corporate investment in physical infrastructure, fibre optic cables laid under seabeds, mass production of computers from low-wage workers in the East, and mass affluence in Western nations. If you are in the position to be having dreams of technological escape, you are probably not in a position to be exiting mainstream society. You are mainstream society.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Don’t get me wrong. Wilson is a <a href="https://www.youtube.com/watch?v=wIJThk-eTAM">subtle and interesting thinker</a>, and it is undoubtedly unfair to suggest that he really believes that one can escape the power dynamics of the messy real world by finding salvation in a kind of internet Matrix. What he is really trying to do is to invoke one side of the crypto-anarchist mantra of ‘<i>privacy for the weak, but transparency for the powerful</i>’.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">That is a healthy radical impulse, but the conservative element kicks in when the assumption is made that somehow privacy alone is what enables social empowerment. That is when it turns into an individualistic ‘just leave me alone’ impulse fixated with negative liberty. Despite the rugged frontier appeal of the concept, the presumption that empowerment simply means being left alone to pursue your individual interests is essentially an ideology of the already-empowered, not the vulnerable.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">This is the same tension you find in the closely related cypherpunk movement. It is often pitched as a radical empowerment movement, but as <a href="http://www.cybersalon.org/cypherpunk/">Richard Boase</a> notes, it is “a world full of acronyms and codes, impenetrable to all but the most cynical, distrustful, and political of minds.” Indeed, crypto-geekery offers nothing like an escape from power dynamics. One merely escapes to a different set of rules, not one controlled by ‘politicians’, but one in the hands of programmers and those in control of computing power.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">It is only when we think in these terms that we start to see Bitcoin not as a realm ‘lacking the rules imposed by the state’, but as a realm imposing its own rules. It offers a <i>form</i> of protection, but guarantees nothing like ‘empowerment’ or ‘escape’.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">Techno-Leviathan</h3><div style="text-align: justify;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://www.bl.uk/onlinegallery/takingliberties/images/55hobbesleviathansmall.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://www.bl.uk/onlinegallery/takingliberties/images/55hobbesleviathansmall.jpg" height="300" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">'COME INTO MY ARMS, CONTRACT TO ME'</td></tr></tbody></table><br /></div><div style="text-align: justify;">Technology often seems silent and inert, a world of ‘apolitical’ objects. We are thus prone to being blind to the power dynamics built into our use of it. For example, isn’t email just a useful tool? Actually, it is highly questionable whether one can ‘choose’ whether to use email or not. Sure, I can choose between Gmail or Hotmail, but email’s widespread uptake creates network effects that mean opting out becomes less of an option over time. This is where the concept of becoming ‘enslaved to technology’ emerges from. If you do not buy into it, you <i>will</i> be marginalised, and that <i>is</i> political.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">This is important. While individual instances of blockchain technology can clearly be useful, as a class of technologies designed to mediate human affairs, they contain a latent potential for encouraging technocracy. When disassociated from the programmers who design them, trustless blockchains floating above human affairs contains the specter of <i>rule by algorithms</i>. It is a vision (probably accidently) captured by <a href="http://www.theepochtimes.com/n3/665367-bitcoin-2-0/">Ethereum’s Joseph Lubin</a> when he says “There will be ways to manipulate people to make bad decisions, but there won’t be ways to manipulate the system itself”.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Interestingly, it is a similar abstraction to that made by Hobbes. In his <i>Leviathan</i>, self-regarding people realise that it is in their interests to exchange part of their freedom for security of self and property, and thereby enter into a contract with a <i>Sovereign</i>, a deified personage that sets out societal rules of engagement. The definition of this Sovereign has been softened over time – along with the fiction that you actually contract to it – but it underpins modern expectations that the government should guarantee property rights.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Conservative libertarians hold tight to the belief that, if only hard property rights and clear contracting rules are put in place, optimal systems spontaneously emerge. They are not actually that far from Hobbes in this regard, but their irritation with Hobbes’ vision is that it relies on politicians who, being actual people, do not act like a detached contractual Sovereign should, but rather attempt to meddle, make things better, or steal. Don’t decentralised blockchains offer the ultimate prospect of protected property rights with clear rules, but without the political interference?</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">This is essentially the vision of the internet <i>techno-leviathan</i>, a deified crypto-sovereign whose rules we can contract to. The rules being contracted to are a series of algorithms, step by step procedures for calculations which can only be overridden with great difficulty. Perhaps, at the outset, this represents, à la Rousseau, the <i>general will</i> of those who take part in the contractual network, but the key point is that if you get locked into a contract on that system, there is <i>no breaking out of it</i>.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">This, of course, appeals to those who believe that powerful institutions operate primarily by <i>breaching</i> property rights and contracts. Who <i>really</i> believes that though? For much of modern history, the key issue with powerful institutions has not been their willingness to break contracts. It has been their willingness to use seemingly unbreakable contracts to exert power. Contracts, in essence, resemble algorithms, coded expressions of what outcomes should happen under different circumstances. On average, they are written by technocrats and, on average, they reflect the interests of elite classes.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">That is why liberation movements always seek to break contracts set in place by old regimes, whether it be peasant movements refusing to honour debt contracts to landlords, or the DRC challenging legacy mining concessions held by multinational companies, or SMEs contesting the terms of <a href="http://www.risk.net/risk-magazine/feature/2196423/uk-banks-face-up-to-sme-swap-misselling-claims">swap contracts</a> written by Barclays lawyers. Political liberation is as much about contesting contracts as it is about enforcing them.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">Building the techno-political vision 3.0</h3><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The point I am trying to make is that you do not escape the world of big corporates and big government by wishing for a trustless set of technologies that collectively resemble a technocratic crypto-sovereign. Rather, you use technology as a tool within ongoing political battles, and you maintain an ongoing critical outlook towards it. The concept of the decentralised blockchain is powerful. The cold, distrustful edge of cypherpunk, though, is only empowering when it is firmly in the service of creative warm-blooded human communities situated in the physical world of dirt and grime.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Perhaps this means de-emphasising the focus on how blockchains can be used to store digital assets or <a href="http://www.theepochtimes.com/n3/665367-bitcoin-2-0/">property</a>, and focusing rather on those without assets. For example, think of the potential of <i>blockchain voting systems</i> that groups like <a href="http://restartdemocracy.org/">Restart Democracy</a> are experimenting with. Centralised vote-counting authorities are notorious sources of political anxiety in fragile countries. What if the ledger recording the votes cast was held by a decentralised network of citizens, with voters having a means to anonymously transmit votes to be stored on a publicly viewable database?</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">We do not want a future society free from people we have to trust, or one in which the most we can hope for is privacy. Rather, we want a world in which technology is used to dilute the power of those systems that cause us to doubt trust relationships. Screw escaping to Mars.<br /><br /><br /><hr /><h3>If you enjoyed this article, please consider...</h3>I sometimes spend weeks writing these articles, and don't generally get paid to do it, so if you enjoyed please consider doing one or two of the following:<br /><ol><li>Donate by <a href="http://suitpossum.blogspot.co.uk/p/support.html">buying me a virtual beer</a></li><li>Donate Bitcoin (see side panel)</li><li>Tweet: You can tweet it out&nbsp;<a href="https://twitter.com/intent/tweet?url=http%3A%2F%2Fsuitpossum.blogspot.com%2F2014%2F06%2Ftechno-leviathan-bitcoin-politics.html%3Fspref%3Dtw&amp;text=The%20Heretic%27s%20Guide%20to%20Global%20Finance%3A%20Hacking%20the%20Future%20of%20Money%3A%20Visions%20of%20a%20techno-leviathan%3A%20The%20politics%20of%20the...&amp;original_referer=http%3A%2F%2Fsuitpossum.blogspot.co.uk%2F2014%2F06%2Ftechno-leviathan-bitcoin-politics.html">here</a></li><li>Share it on your Facebook wall&nbsp;<a href="http://www.blogger.com/share-post.g?blogID=6454624189383327908&amp;postID=1461358895992838867&amp;target=facebook">here</a>&nbsp;</li><li>Email it to a friend from&nbsp;<a href="https://www.blogger.com/email-post.g?blogID=6454624189383327908&amp;postID=1461358895992838867">here</a>&nbsp;</li><li>Submit to&nbsp;<a href="http://www.reddit.com/">Reddit</a>&nbsp;</li><li>Link to the article from your own blog so your readers can see it too</li></ol><div>Cheers!</div></div></div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/edhjgQUaUIw" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com2http://suitpossum.blogspot.com/2014/06/techno-leviathan-bitcoin-politics.htmltag:blogger.com,1999:blog-6454624189383327908.post-72073146528693449072014-04-04T19:45:00.000+01:002016-04-18T11:13:51.243+01:00Crowdfunding critical journalism, and why it's good for democracy<div dir="ltr" style="text-align: left;" trbidi="on"><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div><i><br /></i></div><hr /><div style="text-align: justify;">(Note: I originally wrote this article for Contributoria as <a href="https://www.contributoria.com/issue/2014-04/52fb61421035cc010b000081">Crowdfunding Critical Thought</a>, and it is republished here under a <a href="https://creativecommons.org/licenses/by-nc/4.0/">Creative Commons</a> license. To republish please attribute original)</div><hr /><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Greg Palast’s approach to investigative journalism can be summed up in one phrase: <i>Stand up for the underdogs, and take on the fatcats</i>. His <a href="http://www.gregpalast.com/">hard-hitting reports</a> on corporations like ExxonMobil, politicians like Bush, and shadowy institutions like vulture funds stem from an impulse to challenge those players with the power to bend the rules to their private advantage. That’s why functioning democracies need people like Palast.<br /><br /></div><div style="text-align: justify;"></div><div style="text-align: justify;">Such a role faces two unique challenges though. Firstly, powerful institutions and individuals tend to hide behind walls of secrecy that extend over vast geographical space. Investigating a corporation, or a government spy programme, requires a lot of time, a lot of travel, and a lot of prying into hard-to-access information sources.<br /><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://one-org.s3.amazonaws.com/us/wp-content/uploads/2014/02/Honesty-Awards_Corps.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://one-org.s3.amazonaws.com/us/wp-content/uploads/2014/02/Honesty-Awards_Corps.png" height="233" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">HMM, WHERE TO START?</td></tr></tbody></table><div class="separator" style="clear: both; text-align: center;"></div>Secondly, it entails a lot of risk. People like Palast by necessity must make corporations, governments, and powerful individuals very angry, but those are also the parties that have the most ability to hire expensive legal teams to intimidate challengers. They also frequently own the media outlets, or have the most ability to buy the advertising space that media outlets rely on for income.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div><div style="text-align: left;"></div>Therefore, not only is investigative journalism the most expensive style of journalism, but it is also the most likely to incur further liabilities once a story gets published. Providing finance to underdog investigative journalists – fronting them money to go off in search of stories – has always been a risky undertaking.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">In an era when media groups are under increasing financial stress then, the position of the investigative journalist is under threat. Pressure to deliver advertising click-throughs, for example, drives online publications towards shallower stories with limited shelf-lives. I call this FMCJ, for ‘fast moving consumer journalism’. Like <a href="http://en.wikipedia.org/wiki/Fast-moving_consumer_goods">fast moving consumer goods</a>, the aim is to create a high volume of low cost media product to be quickly consumed and discarded.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Rather than prioritising investigation and analysis, FMCJ journalism rewards content that draws short-term attention whilst inspiring minimal reflection. It thus has much in common with the field of marketing, with the same use of catchy taglines and graphics to churn social-media sharing. Most journalists don’t want to be marketers though. They want to do meaningful reporting that makes a lasting impact. To do this, they need new outlets for publishing, and new ways to finance themselves.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><h3>Alternative model 1: Project-based journalism crowdfunding</h3></div><div style="text-align: justify;"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://www.gregpalast.com/images/baku/GregBaku2.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://www.gregpalast.com/images/baku/GregBaku2.jpg" height="280" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">THIS AIN'T NO HOLIDAY - THIS IS BRITISH PETROLEUM</td></tr></tbody></table>So where does Palast get his financing from? He draws at least part of it from the <a href="http://en.wikipedia.org/wiki/Fast-moving_consumer_goods">Palast Investigative Fund</a>, a non-profit fund that individuals donate to in order to support his ongoing muckraking. In essence it’s a personal crowdfunding site, enabling him to remain independent.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Drawing on one’s readers for direct financial support has grown much easier in an age of digital communication, and established crowdfunding sites like Indiegogo have been used to this end already. For example, Peter Jukes recently <a href="https://www.indiegogo.com/projects/live-tweeting-the-hacking-trial-till-the-verdict">raised £14 552 on Indiegogo</a> to live tweet the UK Phone Hacking trial. Likewise, journalism startup Matter <a href="https://www.kickstarter.com/projects/readmatter/matter">raised $140 201 on Kickstarter</a>, allowing them to fund long-form pieces to be published on the <a href="https://medium.com/matter">Medium platform</a>. Indiegogo and Kickstarter are generalist platforms for raising money, but even more interesting are those sites that offer niche services and support for journalism in particular.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Take, for example, <a href="http://indievoic.es/">Indie Voices</a>, which aims to match up independent journalists in the developing world with readers – or ‘social investors’ – who wish to fund them. The Indie Voices team curates the process, only allowing media projects (including documentaries and articles) that seek to improve the media landscape in developing countries. Projects can then seek contributions in the form of donations, and, in the future, in the form of no-interest loans, low interest loans and equity investments (where funders buy ‘shares’ of ownership in a media project such as a film).</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">A second example is <a href="https://www.inkshares.com/">Inkshares</a>. Unlike Indie Voices, which is explicitly political in nature, Inkshares is open to anything from science writing to children’s stories. Initially set up with the aim of creating an equity crowdfunding platform for books, Inkshares now also provides a donation-based crowdfunding platform for thoughtful long-form articles. And unlike normal publishing, the author retains the rights to the work that gets funded, which means they can also publish the material elsewhere.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><h3>Alternative model 2: Subscription-based crowdfunding</h3></div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="https://encrypted-tbn3.gstatic.com/images?q=tbn:ANd9GcR2HAlQYwV5uw22dIGfkGXr3vC9DfbfxH2ygtoHqYvyST6Ju7pq" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="260" src="https://encrypted-tbn3.gstatic.com/images?q=tbn:ANd9GcR2HAlQYwV5uw22dIGfkGXr3vC9DfbfxH2ygtoHqYvyST6Ju7pq" width="500" /></a></div><br />The shortcoming of sites like Indie Voices though, is that they’re really geared towards once-off projects. What if you wish to run a year-long investigation of tax havens, during which time you plan to run a series of 12 articles? Do you try raise the whole lot in one go, or run 12 separate crowdfundings?</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">One startup with an interesting solution for this is <a href="http://www.beaconreader.com/">Beacon Reader</a>. Rather than funding a once-off project by a particular writer, Beacon Reader is a platform for writers to collect paid subscribers who will offer an ongoing stream of support. While a normal crowfunding project only succeeds if a minimum amount of money is raised, a Beacon Reader crowdfunding campaign succeeds if a certain amount of people (normally 25-100) pledge to pay you $5 a month on an ongoing basis, in exchange for ongoing access to your stories, but also access to all the other stories on the site.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Backing a particular writer on Beacon is thus a gateway into a broader subscription to the work of the whole Beacon writer collective. It feels loosely like a kind of writers co-operative, but a competitive one in which writers have to earn their place (and a share of the resultant income stream) by securing a certain number of new subscribers (and to continue building more subscribers over time). Writers get 70% of their subscribers’ cash, and the surplus goes into a collective bonus pot to reward those whose stories receive the most recommendations, thereby incentivising consistent high quality writing.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Crucially though, the writer still owns the rights to the pieces produced, and they can be published elsewhere or sold on to media outlets to further monetise their work. This might be a great option for a writer looking to work through a big issue in small chunks, and who needs stable baseline support to cover their basic costs whilst waiting to get the pieces accepted by bigger publications.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">A second attempt at a subscription model is <a href="http://signup.uncoverage.com/">Uncoverage</a>, which is being set up by Israel Mirsky. Mirsky, recognising both the increasing marginalisation of investigative journalism, and professional journalists’ need for ongoing financing (‘serial funding’), is explicitly targeting the site at professional investigative journalists. Like Beacon, the goal is to establish a subscriber base for individual journalists, but unlike Beacon the ambition is also to create an ‘open, lean newsroom’ that provides a suite of key services like fact-checking, editing, legal support and technology solutions.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><h3>Alternative model 3: The ‘credit union’ approach</h3></div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div>In the examples discussed above, the ‘crowd’ is mostly conceived of as readers who wish to financially support the quality journalism they enjoy. What if the crowd was given a closer role in the actual article production process though? That’s what <a href="http://www.contributoria.com/">Contributoria</a> attempts to add in. When one becomes a member, you get the right to pitch articles to be funded, but also to financially support other’s articles, and to offer editorial advice to those who you’ve backed.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">It thus has the feeling of a true writers’ co-operative, or perhaps a <a href="http://en.wikipedia.org/wiki/Credit_union">credit union</a> for journalism in which members support each other. This very article, for example, was originally <a href="http://www.contributoria.com/issue/2014-04/52fb61421035cc010b000081/proposal">pitched on Contributoria</a>, but in joining I got to vote for other articles I want to see, including Joel Benjamin’s <a href="https://www.contributoria.com/issue/2014-04/5308ed3ec25ea8f06c0000ea">guide to Freedom of Information requests</a>, and Dom Aversano’s exploration of <a href="https://www.contributoria.com/issue/2014-04/52fe6156351fe44a38000032">city soundscapes</a>. This also gave me the right to provide input into those articles. As a user of the platform I am thus a hybrid between a receiver of funding, and giver of funding, a receiver of editorial services and giver of editorial services.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Right now though, Contributoria is in beta phase, and is free to join, which means it still hasn’t started asking members to pay dues. It will be fascinating to see how the process is managed going forward. Could it become a vibrant self-sustaining community of writers, readers and editors, or will members’ dues need to be supplemented with money from external sponsors? Another key question is how to incentivise members to devote time to checking each other’s articles. Could editors and writers team up to be funded together?</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><h3>Democratic commons in commercial context</h3></div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="http://fc03.deviantart.net/fs70/f/2011/118/8/5/creative_commons_protected_by_doctormo-d3f4pc8.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://fc03.deviantart.net/fs70/f/2011/118/8/5/creative_commons_protected_by_doctormo-d3f4pc8.png" height="320" width="257" /></a></div>The diverse crowfunding platforms discussed above have a number of common themes. Firstly, they set themselves against both corporate-backed media (in developed countries) and state-backed media (in developing countries) by offering a technological means to decentralise funding, and thereby to ‘democratise journalism’.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Their claim to democratisation rests on the assertion that they both maintain independence of journalists, but also give voice to journalists that might otherwise be ignored. This message is complemented by the claim that this can be a sustainable way of financing high quality journalism (after all, a platform might be democratic, but that’s no guarantee of quality or long-term viability).</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Secondly, the platforms are converging on a model of prepayment by some, for the common benefit of all. In contrast to the buyer of a magazine, who purchases content once it is produced (and thereby pays back the original financiers and publisher), the crowdfunding backer in essence prepays for material that will be developed in the future, and thereby brings production of the material into being.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">That said, although the core body of funders bring an article to life, they frequently do not have exclusive access to the material, but rather subsidise the broader public who will get access to the stories too (via, for example, the articles being published elsewhere on a Creative Commons license). In essence, private individuals are holding the commons open for others to use, in much the same way as Wikipedia gets supported by donations from a small percentage of its users.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Interesting, and potentially conflicting, commercial dynamics emerge from this. We could argue that what the crowd is actually doing is shielding a writer from normal media commissioning processes – whether those are corporate or state led – maintaining the independence of the journalist to the point where an article is ready to be released into the public. In the cases where the journalist retains the rights to the article though, and the resultant piece is then sold on, we could also argue that the crowd is subsidising media companies who would otherwise have to take on the risk of commissioning work.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">If this was to become widespread practice, we could begin to see a separation of journalism production from distribution. Platforms like Uncoverage might begin to serve a role analogous to a literary agent, providing a platform to develop quality journalism which is then cherrypicked by publishing outlets. We could conceivably even see the emergence of journalism ‘<a href="http://www.investopedia.com/terms/o/offtake-agreement.asp">offtake agreements</a>’, media companies offering advance guarantees to publish content if it gets initially funded by the crowd.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><h3>The reader as creative producer</h3></div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="http://www.aljazeera.com/mritems/images/2013/6/24/2013624154037684713_8.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://www.aljazeera.com/mritems/images/2013/6/24/2013624154037684713_8.jpg" height="312" width="500" /></a></div><br />But what kind of reader is prepared to fund articles which may then be used by the broader public or potentially even commercial media outlets? Perhaps it is a new sort of reader, seeking a more active, creative role.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The irony of our information-saturated era is that in the face of overwhelming amounts of content, people feel a sense of ‘opportunity cost’ to engaging with it, the perception that committing to reading anything must entail not reading something else which is also available. Thus, many people find themselves skimming a lot shallowly but reading very little deeply. It’s questionable whether a person browsing websites every day absorbs any more information than a person in 1897 with a single weekly newspaper.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The real question then, is how to create a society with wide access to diverse media, but one in which people actually engage with such media meaningfully. One might imagine, as a thought experiment, a giant benevolent foundation that funds all manner of amazing content, only to dump it into people’s already saturated Facebook newfeeds. True democratisation is not just about what content gets created. It’s about how people use and act on that content. Is an article about corporate fraud just another dramatic item in a stream of flickering entertainment passing by you each day, or is it actually something that might make you get out onto the streets to protest?</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Creating a decentralised crowdfunding infrastructure perhaps offers one means of combining the creation of diverse content with a new means of connecting with it. People who have prepayed for content in the knowledge that they are helping to bring forth unique critical voices, are also people who wish to move past being mere passive consumers of media. Instead, they are hybrid producer-consumers with an interest in critically engaging with the content they helped bring to life. And perhaps it is in the development of this new type of participatory reader that the true democratic potential of crowdfunding lies.</div><div style="text-align: justify;"><br /><br /><hr /><h3>If you enjoyed this article, please consider...</h3>I sometimes spend weeks writing these articles, and don't generally get paid to do it, so if you enjoyed please consider doing one or two of the following:<br /><ol><li>Tweet: You can tweet it out&nbsp;<a href="https://twitter.com/intent/tweet?url=http%3A%2F%2Fsuitpossum.blogspot.com%2F2014%2F04%2Fcrowdfunding-journalism-democracy.html%3Fspref%3Dtw&amp;text=The%20Heretic%27s%20Guide%20to%20Global%20Finance%3A%20Hacking%20the%20Future%20of%20Money%3A%20Crowdfunding%20critical%20journalism%2C%20and%20why%20it%27s%20goo...&amp;original_referer=http%3A%2F%2Fsuitpossum.blogspot.co.uk%2F2014%2F04%2Fcrowdfunding-journalism-democracy.html">here</a></li><li>Share it on your Facebook wall&nbsp;<a href="http://www.blogger.com/share-post.g?blogID=6454624189383327908&amp;postID=7207314652869344907&amp;target=facebook">here</a>&nbsp;</li><li>Email it to a friend from&nbsp;<a href="https://www.blogger.com/email-post.g?blogID=6454624189383327908&amp;postID=7207314652869344907">here</a>&nbsp;</li><li>Leave a comment!&nbsp;</li><li>Submit to&nbsp;<a href="http://www.reddit.com/">Reddit</a>&nbsp;</li><li>Link to the article from your own blog so your readers can see it too</li></ol><div>Cheers!</div></div></div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/xj3VSv_7nSc" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com1http://suitpossum.blogspot.com/2014/04/crowdfunding-journalism-democracy.htmltag:blogger.com,1999:blog-6454624189383327908.post-86103846808729871152014-03-30T23:40:00.000+01:002014-03-31T14:56:32.944+01:00LSFA: Building a financial hackerspace in 3 phases<div dir="ltr" style="text-align: left;" trbidi="on"><div class="separator" style="clear: both; text-align: center;"></div><br /><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://24.media.tumblr.com/bfe916e3eb38384d3ea0614b679c8501/tumblr_mvrhihFMUu1r5mhwao1_500.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://24.media.tumblr.com/bfe916e3eb38384d3ea0614b679c8501/tumblr_mvrhihFMUu1r5mhwao1_500.jpg" height="278" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><br /></td></tr></tbody></table><div style="text-align: justify;">Over the last 5 years I’ve been working on ways to break down the oppressive wall of mystique that shrouds global finance, and to experiment with methods of 'hacking' financial systems. At first this took the form of my own ‘gonzo’ anthropological explorations of the world of derivatives trading. It has since merged into me working with campaign groups like ActionAid, MoveYourMoneyUK and the World Development Movement, and getting involved in the alternative finance community via initiatives like the Finance Innovation Lab.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">In 2013, whilst writing <i><a href="http://suitpossum.blogspot.co.uk/p/the-heretics-guide.html">The Heretic's Guide to Global Finance</a></i>,&nbsp;I decided to start developing an experiential workshop series to help London's diverse array of activists, artists and alternative economists grapple with the financial sector in their midst. I decided to call this <i>London School of Financial Activism (LSFA)</i>.</div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">Phase 1: Seed-funding</h3><div style="text-align: justify;">In 2013 I ran a crowdfunding campaign to provide me with initial seedfunding to develop the idea. I raised £5014 from 168 funders. That was never going to be enough to set up LSFA in its entirety (with a website, logo, venues etc), but it has been vital in giving me some breathing room to develop the idea, as well as helping to build an initial base of supporters and press coverage. As I discussed recently at the <a href="http://networkcultures.org/wpmu/moneylab/program-3/conference-sessions/">MoneyLab </a>conference in Amsterdam, I somewhat miscalculated the costs of the<a href="http://suitpossum.blogspot.co.uk/2013/08/lsfa-crowdfunding-update-meet-hedge.html"> crowdfunding rewards</a>&nbsp;and the time it would take to deliver, but on the upside I learned a whole lot about <a href="http://suitpossum.blogspot.co.uk/2013/03/kickstarting-gogofactor-top-tips-i.html">how to do crowdfunding</a>&nbsp;(and have turned into something of an informal crowdfunding consultant to a fair amount of people since then).</div><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">Phase 2: Developing workshop content</h3><div style="text-align: justify;">In May 2013 my book was released, and generating publicity for the book subsequently took up a large amount of my time. The upshot of this is that I’ve been asked to do a wide range of <a href="http://suitpossum.blogspot.co.uk/p/events.html">talks and workshops</a> off the back of it, which has both increased my experience in teaching, and has helped me to generate and test a range of workshop ideas. I’ve thus been able to develop the following list of workshops over the last several months.</div><div style="text-align: justify;"><br /></div><h4 style="text-align: justify;"><i>Workshop Series 1: A hacker approach to demystifying global finance</i></h4><div class="separator" style="clear: both; text-align: center;"><a href="http://www.visualcomplexity.com/vc/blog/uploads/2009/05/airline_internet_2.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://www.visualcomplexity.com/vc/blog/uploads/2009/05/airline_internet_2.jpg" height="225" width="500" /></a></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">I’ve been giving a range of interactive lectures on demystifying the financial sector, and the use of hacker approaches to exploring, jamming and rewiring 1) money 2) the financial intermediaries that steer money around the world and 3) the financial instruments they use to do that. This has including talks at <a href="http://www.wildernessfestival.com/artist/natures/">Wilderness Festival</a>, <a href="http://www.beltanenetwork.org/ai1ec_event/how-to-be-a-financial-hacker/">Edinburgh Festival</a> and <a href="http://www.ewjf.org.uk/event/the-heretics-guide-to-global-finance-hacking-the-future-of-money/">Edinburgh World Justice Festival</a>. The next step is to turn them into experiential adventures within the physical space of the financial sector. I'm in touch with the team at <a href="http://occupytours.org/">Occupy London Tours</a>&nbsp;who have been doing great guided tours of Mayfair, Canary Wharf and the City, and see some great potential for partnerships.</div><div style="text-align: justify;"><br /></div><h4 style="text-align: justify;">Workshop Series 2: Hot topics in financial activism</h4><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="http://a1.s6img.com/cdn/0009/p/2123031_16227109_lz.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://a1.s6img.com/cdn/0009/p/2123031_16227109_lz.jpg" height="332" width="500" /></a></div><br />The broader workshops aimed at generally demystifying finance are ideal for opening the door to more specific and in-depth workshops on the problems of the financial sector. These include:</div><div style="text-align: justify;"></div><ol><li style="text-align: justify;"><i>Tax Justice: Exploring the offshore world</i>:&nbsp;Offshore financial centres are an incredibly important element of the global financial system and international trade system, and are deeply intertwined in corporate operations. It's a crucial area for campaigners to engage with, and one which I have spent time actively exploring.&nbsp;I've worked on&nbsp;tax justice (for example,&nbsp;with&nbsp;ActionAid), spoke at&nbsp;the <a href="http://www.eventbrite.co.uk/e/how-to-stop-global-tax-dodging-actionaid-campaigner-conference-tickets-8759380543">Action Aid tax justice conference</a> in November, and have been forging relationships with campaigners, academics and even artists who are working in this area (for example, Paulo Cirio who started the controversial but awesome&nbsp;offshore company hack&nbsp;<a href="http://loophole4all.com/about.php">Loophole4All</a>).</li><li style="text-align: justify;"><i>Commodity speculations: Exploring commodity markets</i>: We are constantly surrounded by commodities, and yet very few of us have any idea about the supply chains, giant commodity traders, and the financial players involved in them. I have worked with WDM on their <a href="http://www.wdm.org.uk/food-speculation">commodity speculation campaign</a> over the last few years, and I’ve also built experience investigating groups like GlencoreXstrata (see my <a href="http://www.theecologist.org/News/news_analysis/1235793/glencore_faces_questions_over_controversial_drc_mine_sales.html">article here</a> for example), informally collaborating with groups like Global Witness, Greenpeace and others</li><li style="text-align: justify;"><i>Dirty Detective Work: Tracing fossil fuel financing</i>: It's becoming increasingly crucial for campaign groups to understand and challenge the investors who support major fossil fuels companies and who have entrenched interests in keeping us in the fossil fuel dark ages. That's why I've been getting involved in helping student divestment groups, giving talks at Cambridge, Oxford, Kings College London,&nbsp;University of East Anglia&nbsp;and Surrey&nbsp;University. I piloted a workshop on tracing fossil fuel financing at People &amp; Planet’s <a href="http://peopleandplanet.org/shared-planet-2013/workshops">Shared Planet Conference</a> in November, and have been establishing relations with the <a href="http://350.org/">350.org</a> team, and with other groups such as <a href="http://www.marketforces.org.au/">Market Forces Australia</a>.</li><li style="text-align: justify;"><i>Culture-Hacking: Anthropology as activism</i>:&nbsp;I recently gave a talk at Sussex University Anthropology department on the concept of activist anthropology and culturehacking, using anthropological tools to gain access to and challenge powerful industries.&nbsp;There’s a lot of interesting work being done on&nbsp;financial anthropology and social studies of finance, but it all tends to be locked up in academia, rather than publicly accessible. Figures like David Graeber have raised the profile of economic anthropology as a progressive, engaged discipline, but it would be great to have a space for people to actively develop this.</li></ol><br /><h4 style="text-align: justify;">Workshop Series 3: Open Source Finance</h4><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="http://images.fineartamerica.com/images-medium-large/2-circuit-board-seisiri-silapasuwanchai.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://images.fineartamerica.com/images-medium-large/2-circuit-board-seisiri-silapasuwanchai.jpg" height="400" width="400" /></a></div><br />Using Open Source culture as the backdrop for alternative finance is an idea I initially sketched out at a <a href="https://soundcloud.com/theodi/odi-fridays-open-source">talk on open source finance</a> I gave to the Open Data Institute. I then developed it further in the model I sketched out on <a href="http://suitpossum.blogspot.co.uk/2013/11/building-creative-commons-five-pillars.html">my blog</a>&nbsp;and in <a href="http://roarmag.org/2013/12/brett-scott-open-source-finance/">ROAR Magazine</a>. To me, this provides a very useful framework with which to explore current alternatives to mainstream finance (which, in contrast to open source, is closed and exclusive). Here are three workshops that could fall under this broader heading:</div><div style="text-align: justify;"></div><ol><li style="text-align: justify;"><i>Alternative economic design</i>: Building alternatives to mainstream finance requires a pragmatic, yet creative, design mindset. This is something I’m really keen to develop with people who have a passion for design. In August I piloted a workshop at <a href="http://www.shambalafestival.org/">Shambala Festival</a> entitled 'Build your own pop-up currency', and then collaborated with Cecilia Wee and Leander Bindewald (from New Economics Foundation) on a similar workshop for the <a href="http://www.rca.ac.uk/">Royal College of Art</a>. I’ve done further talks on this topic at <a href="http://www.wearefierce.org/fierce-festival-2013/programme/discussion-live-art-in-2113">Fierce Festival</a> and Central St. Martins design school, and then spent a term as an assistant lecturer in the Expanded Designer course at <a href="http://www.arts.ac.uk/camberwell/">Camberwell College of Art</a>, getting students to explore hacker culture and alternative currency design</li><li style="text-align: justify;"><i>Anthropology of alternative exchange</i>: It’s only through exploration of alternative forms of exchange that we really get to grips with mainstream forms of exchange (which in turn form the basis for the mainstream financial system).&nbsp;It's an area that I've been actively exploring. It started with a <a href="http://aeon.co/magazine/living-together/so-you-want-to-invent-your-own-currency/">big article for Aeon Magazine</a> about monetary cultures and since then, I’ve talked on gender dynamics of Bitcoin at the London Bitcoin Expo and cultural elements of cryptocurrency at LSE sociology department.</li><li style="text-align: justify;"><i>Ecological / Permacultural design principles and finance</i>: Ecological design principles provide a great framework for thinking about building an economic system that stays within planetary boundaries. My explorations into this topic started with me writing a piece for Transition Free Press on <a href="http://suitpossum.blogspot.co.uk/2013/12/seedbombing-applying-principles-of.html">permacultural finance</a>. I was then invited by Schumacher College and Transition Town Totnes to give a talk on <a href="https://www.youtube.com/watch?v=iaUoLrgT3RQ">permacultural design principles and finance</a>&nbsp;(and I was also recently interviewed on by <a href="http://www.mixcloud.com/21stCenturyPermaculture/22dec2013/">21st Century Permaculture on Shoreditch Radio</a> about this).</li><li style="text-align: justify;"><i>Building Noah’s Ark: Exploring the DNA of pension funds</i>: Pension funds are often overlooked behemoths of the financial world, helping to define the future of our economies through their investment decisions. That’s why it’s so important to reform the way that they work, and to re-engage people with how they work. I recently completed a <a href="http://www.theguardian.com/sustainable-business/series/rewiring-pension-funds">series of 3 articles for Guardian Sustainable Business</a>, breaking down the problems inherent in mainstream investment, what’s keeping them in place, and potential alternatives. The basic framework I sketched out could be a great basis for an in-depth workshop in which we explore investment culture, and this can also be tied into other workshops around fossil fuel divestment</li></ol><div style="text-align: justify;"><br /></div><h3 style="text-align: justify;">Phase 3: Building the hackerspace</h3><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="http://fc01.deviantart.net/fs30/i/2008/059/5/8/UNDER_CONSTRUCTION_by_Creamania.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://fc01.deviantart.net/fs30/i/2008/059/5/8/UNDER_CONSTRUCTION_by_Creamania.jpg" height="281" width="500" /></a></div><br />Now that the outline for the initial workshops has been established, there are series of steps that need to be taken to formalise LSFA a bit more. Some that I'm currently working on include:</div><div style="text-align: justify;"><ol><li>Logo &amp; Website: I'm in final stages of developing a new logo for LSFA, working with designer <a href="http://www.behance.net/DimStam">Dimitrios Stamatis</a> (as part of a bitcoin/barter exchange). A dedicated website will be up soon</li><li>Physical location: I've identified a series of potential venues, and now trying to negotiate a space. If anyone has any proposals or ideas for appropriate spaces, do let me know</li><li>Company structure: I'd like to develop an experimental company structure for LSFA, so some legal advice is required</li></ol></div><div style="text-align: justify;">I want LSFA to go beyond simply being a place where lectures are delivered. I want it to develop into a dynamic open space where members can come and hang out, use communal facilities and work on creative projects that 1) help them understand the financial sector whilst 2) building useful tools that challenge it. We do adventurous exploration of powerful systems, develop creative, mischievous ways to jam such systems, and experiment with ways to rewire them. In essence I'd like to create a financial <i>hackerspace</i>.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">LSFA is thus not a 'school' where people are passive receivers of training, but rather a place for active participants who wish to develop practical or conceptual experiments in financial activism (e.g. shareholder activism / activist hedge funds), arts, (e.g. films, theatre, performance art), anthropology (e.g. ethnographic research projects), education (e.g. immersive tours, phone apps, mapping projects) and alternatives (e.g. alternative currencies / P2P systems / co-operative models). The school ideally becomes a site for the ‘<a href="http://en.wikipedia.org/wiki/Software_testing#Beta_testing">beta-testing</a>’ of alternatives form of economic life.</div><div style="text-align: justify;"><br />The aim is thus both educational and practical. People get involved in creative projects as a way to learn about a system they might otherwise feel alienated from or avoid. They subsequently create products, artefacts, processes or installations that the public can interact with too. I’d also like the school to operate on Creative Commons principles, in that outputs from one cohort of participants can be used as inputs for the next cohort, who are free to build on the work of others. The idea is to create a vibrant community with a sense of communal ownerships over the work being produced.<br /><br />If you'd like more information, or would like to get involved in some way, my contact details are in the right hand panel. Watch this space for updates.<br /><div class="separator" style="clear: both; text-align: center;"><a href="http://sd.keepcalm-o-matic.co.uk/i/keep-calm-and-watch-this-space-22.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://sd.keepcalm-o-matic.co.uk/i/keep-calm-and-watch-this-space-22.png" height="320" width="274" /></a></div><br /><br /></div></div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/_kwUKNO3UeI" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com0http://suitpossum.blogspot.com/2014/03/lsfa-building-financial-hackerspace-in.htmltag:blogger.com,1999:blog-6454624189383327908.post-4378449997311351712014-01-12T18:13:00.000+00:002014-12-05T17:16:29.330+00:00Crypto-Patriarchy: The problem of Bitcoin's male domination<div dir="ltr" style="text-align: left;" trbidi="on"><div class="separator" style="clear: both; text-align: center;"></div><div style="text-align: justify;"><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="http://2.bp.blogspot.com/-W50OoKy-zZY/UtGpSdfr7NI/AAAAAAAACHI/cXj7xodOdek/s1600/Bitcoin+Men+7.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://2.bp.blogspot.com/-W50OoKy-zZY/UtGpSdfr7NI/AAAAAAAACHI/cXj7xodOdek/s1600/Bitcoin+Men+7.jpg" height="375" width="500" /></a></div><i><br /></i><i>(Note: This is based on a talk I first gave at <a href="http://www.bitcoinexpo.co.uk/schedule">London Bitcoin Expo 2013</a>)</i></div><br />Imagine a scenario 10 years from now in which Bitcoin has managed to establish itself as an important global currency, supported by a myriad of Bitcoin companies, trade associations, and educational institutions. Now imagine the board meetings of those organisations. What will their demographic breakdown be? Will it resemble&nbsp;<a href="http://reports.barclays.com/ar12/governance/boardofdirectors.html">this</a>, or <a href="http://www.bp.com/en/global/corporate/investors/governance/the-board.html">this</a>, or <a href="http://www.glencorexstrata.com/about-us/corporate-governance/board-of-directors/">this</a>?<br /><br />It's no secret that the directorships of large FTSE 100 or S&amp;P 500 companies are overwhelmingly dominated by men, and white men at that. This is not just due to random chance, or men's innate brilliance. This is due to our society having a lingering, systematic male bias built upon hundreds of years in which men have had the most access to job opportunities, educational opportunities, political rights, and (perhaps most importantly) cultural&nbsp;<i>encouragement</i>&nbsp;to actually seek those positions. This has helped men build capital, skills and to <a href="http://en.wikipedia.org/wiki/Hegemonic_masculinity">normalise</a>&nbsp;the idea that they should&nbsp;dominate those industry sectors that command the highest market values (not to mention government positions and academia).<br /><br />I clearly put a negative spin on that, but I am aware that some people (such as traditional conservatives) see nothing wrong with the idea of the overlord male figure, watching over woman and child (and society) like a sometimes-benevolent-sometimes-wrathful authoritarian god. It <i>particularly</i> disturbs me though, when I detect this domination seeping into areas that are supposed to be challenging traditional structures. Such as the Bitcoin community.<br /><br /><br /><h4><b>Crypto-patriarchy: Gender bias in Bitcoin demographics</b></h4><div style="text-align: center;"><b><br /></b></div><div><div class="separator" style="clear: both; text-align: center;"><a href="http://cdn.theatlantic.com/static/mt/assets/hua_hsu/rothman_mansplain_post.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://cdn.theatlantic.com/static/mt/assets/hua_hsu/rothman_mansplain_post.png" height="243" width="500" /></a></div><br />I first started thinking about the problem of crypto-patriarchy when I was asked to speak at a the&nbsp;<a href="http://www.bitcoinexpo.co.uk/eventspeakers">London Bitcoin Expo</a>,&nbsp;which had an epic line-up of over 15 male speakers. Faced with such a blatant wall of testosterone, I contacted the organiser and asked him why this was the case. He told me that he'd tried, but couldn't find any women to speak. I sent a few emails to people deeply involved in the bitcoin scene and asked them if they knew any women involved. 'Pretty much no' was the answer.<br /><br />Then I realised that all but two of the 30 people who have used <a href="http://suitpossum.blogspot.co.uk/p/the-heretics-guide.html">bitcoin to buy my book</a> have been male. This is in contrast to sales I've made in other alternative currencies - such as time credits and local currencies - which have included far more women.<br /><br />UCL researcher Lui Smyth conducted a survey of the Bitcoin community and found <a href="http://simulacrum.cc/2013/03/04/the-demographics-of-bitcoin-part-1-updated/">95% to be male</a>. This rings true to my experience of the London Bitcoin Expo, which felt like - to use an academic term - a 'cockfest' (echoed by <a href="http://motherboard.vice.com/en_ca/blog/bitcoin-needs-women">Victoria Turk's observations</a> about the event). Out of the 381 people signed up&nbsp;<a href="http://www.meetup.com/London-bitcoin-meetup/events/150048852/?a=me1_grp&amp;rv=me1&amp;_af_eid=150048852&amp;_af=event">here</a>, only around 10% are women. I used to work in financial derivatives brokering, a male-dominated world if ever there was one, but in my anecdotal experience Bitcoin seems even more male-dominated than traditional finance. And of those women that are involved, they remain hugely under-represented on the&nbsp;<a href="http://www.youtube.com/results?search_query=bitcoin+conference+panel&amp;sm=3">panels at Bitcoin conferences</a>.<br /><br /><blockquote class="twitter-tweet" lang="en"><a href="https://twitter.com/search?q=%23Bitcoin&amp;src=hash">#Bitcoin</a> <a href="https://twitter.com/search?q=%23bitcoinexpo&amp;src=hash">#bitcoinexpo</a> was fascinating only saw the end-- <a href="https://twitter.com/search?q=%23goldmansachs&amp;src=hash">#goldmansachs</a> represented very few women though cept for the lovely <a href="https://twitter.com/stacyherbert">@stacyherbert</a><br />— Vivian Norris (@vivigive) <a href="https://twitter.com/vivigive/statuses/406896814777171968">November 30, 2013</a></blockquote><script async="" charset="utf-8" src="//platform.twitter.com/widgets.js"></script> There are also obvious cases of bigotory towards women in the Bitcoin scene. Check out this comment by a&nbsp;<a href="https://bitcointalk.org/index.php?topic=382267.msg4115863#msg4115863">paragon of humility on Bitcointalk</a>: <i>"Most [women] just don't know jack shit about bitcoins, and that's okay... they will just marry all the men who are bitcoin millionaires"</i>, followed by a picture of an abused woman with the caption 'Women deserve equal rights... and lefts' (aka <a href="http://en.wikipedia.org/wiki/Hook_(boxing)">left-hooks</a>). Wow. (<i>Update 24th Jan</i>: For further examples of such behaviour see '<a href="http://ariannasimpson.com/post/74400025051/this-is-what-its-like-to-be-a-woman-at-a-bitcoin">What it's like to be a women at Bitcoin Meetup</a>'&nbsp;by Facebook's Arianna Simpson)<br /><br /></div><div><br /><div style="text-align: center;"><h4 style="text-align: left;"><b>Why should we care? A rare chance to make something different</b></h4></div></div><div class="separator" style="clear: both; text-align: center;"></div><div>Aside from 1) the obvious issue of injustice, and 2) the fact that there's something wrong when an apparently revolutionary technology seems to receive lukewarm reception from people who make up 51% of the world's population, it's also 3) incredibly boring hanging around in scenes with only men (especially if they're the type of men who only like to hang around other men).<br /><br />Furthermore, if something is not done about it, men's <a href="http://en.wikipedia.org/wiki/First-mover_advantage">first-mover advantage</a> will set in. They'll accumulate the capital and skills and set the tone of the culture. And yes, the boards of bitcoin companies will be male-dominated in 10 years time.<br /><br />Bitcoin's community though, is still new, and it still has a rare opportunity to prove that it's cutting edge in every sense of the word, inclusive as well as technologically advanced (not just something that some people get very rich off... <i>do I sound idealistic?</i>), but to do so there needs to be reflection on barriers to inclusivity.</div><br /><br /><div style="text-align: center;"><h4 style="text-align: left;"><b>So what are the causes?</b></h4></div></div><div style="text-align: justify;"><br /></div><blockquote class="twitter-tweet"><div style="text-align: justify;">Anybody got theories about why <a href="https://twitter.com/search?q=%23bitcoin&amp;src=hash">#bitcoin</a> scene is so male-heavy? Feels like giant cockfest, esp when compared to other alternative currencies</div><div style="text-align: justify;">— Brett Scott (@Suitpossum) <a href="https://twitter.com/Suitpossum/statuses/400989636589146113">November 14, 2013</a></div></blockquote><div style="text-align: justify;"><br /></div><div style="text-align: justify;">I wanted to get to the bottom of this, so I threw out&nbsp;<a href="https://twitter.com/Suitpossum/status/400989636589146113">the question</a>&nbsp;above to that giant decentralised think-tank Twitter.&nbsp;I got a range of explanations back from people (admittedly mostly men). Let's go through some of those.</div><div style="text-align: justify;"><br /><br /></div><div style="text-align: justify;"><div style="text-align: center;"><h4 style="text-align: left;"><b>Explanation 1: Historical chance ('Guys started it, and brought their friends')</b></h4></div></div><div style="text-align: justify;"><a href="https://twitter.com/Activationist/status/400990586699665408">Kenny suggested</a> that the reason was that men just happened to be the first to jump on board, and that the scene was built from that basis. He implies a kind of historical <a href="http://en.wikipedia.org/wiki/Path_dependence">path-dependency</a> to the process. We might construct a&nbsp;<a href="http://en.wikipedia.org/wiki/Counterfactual_history">counterfactual history</a>:&nbsp;It's plausible that if Bitcoin had been started by a group of female scientists at MIT, more women would have subsequently got involved via peer effects and role models. (Strangely enough, in all the speculations about the figure of <a href="http://en.wikipedia.org/wiki/Satoshi_Nakamoto">Satoshi Nakomoto</a>, almost nobody has suggested that she might have been a woman.)<br /><br /></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><div style="text-align: center;"><h4 style="text-align: left;"><b>Explanation 2: Inherent masculinity (the 'boys and their toys' explanation)</b></h4></div></div><div style="text-align: justify;">The obvious next possible explanation is that there is something intrinsic to Bitcoin that simply appeals to men. Tom here actually had a <a href="https://twitter.com/TomHoepfner/status/400992587743367168">psychoanalytic explanation</a>:</div><blockquote class="twitter-tweet" data-conversation="none" lang="en"><a href="https://twitter.com/Suitpossum">@Suitpossum</a> <a href="https://twitter.com/jimmygreer">@jimmygreer</a> it´s the underlying concept of an "erection-like" growth, stopping at 21 Mio BTC - versus the mutual credit approach<br />— Tom Hoepfner (@TomHoepfner) <a href="https://twitter.com/TomHoepfner/statuses/400992587743367168">November 14, 2013</a></blockquote><script async="" charset="utf-8" src="//platform.twitter.com/widgets.js"></script> <br /><div style="text-align: justify;">Here's another light-hearted&nbsp;<a href="https://twitter.com/foucaud_g/status/400997479069392897">Freudian explanation</a>.&nbsp;Maybe though, there's something to this. Bitcoin evangelists frequently claim that it's an apolitical value-free protocol that doesn't exclude anyone, but perhaps there is some inherent 'male-ness' within the design, or perhaps even within the choice of imagery or language used by the original community to promote it ('the aesthetic').</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The more popular theory though, is that Bitcoin is 'risky', and that it thus 'takes balls' to get involved because of its situation, being volatile and semi-illegal. One can imagine men - feeling emasculated by their desk jobs - baying for (a relatively safe) adventure, like a digital version of Fight Club, jockying for position in an ego-driven goldrush. This same myth of 'the risk-taking trader' is what spreadbetting companies exploit to sell their services, beautifully exemplified by this <a href="http://www.youtube.com/watch?v=MwKYjZ_8EcE">utterly wank video</a>.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Finally, there's the classic "men just enjoy technology more", or "men are just more analytical". This again suggests that the reason lies not in social construction of gender roles (see Explanation 5 below), but in some intrinsic biological propensity of men to love machines, code, analysis, leadership, or pretty much anything that is also strangely correlated with also being able to make large amounts of money (yay, we naturally become rich through our inherent nature!)</div><div style="text-align: justify;"><br /></div><br /><div style="text-align: center;"><h4 style="text-align: left;"><b>Explanation 3: Female disdain for Bitcoin ('why would I want to use it?')</b></h4></div><b><br /></b><br /><div class="separator" style="clear: both; text-align: center;"><a href="http://25.media.tumblr.com/tumblr_m1xonkhJmo1qibb1xo1_500.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://25.media.tumblr.com/tumblr_m1xonkhJmo1qibb1xo1_500.jpg" height="350" width="500" /></a></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The flip side of the explanation that men are naturally drawn to Bitcoin, is the idea that women are repelled by it. One version of this argument is that women find it stupid or lame or juvenile, and that they have better things to do with them time than waste energy on pointless currency speculation (you find a similar argument with <a href="http://www.themodernman.com/relationship/why-do-women-hate-it-when-men-play-video-games.html">women and computer games</a>). This&nbsp;<a href="https://twitter.com/Holland4MPE/status/400992514422738944">Twitter respondent here</a>&nbsp;certainly feels that way.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Contrary to the notion that somehow men are more analytical or 'rational', several woman have pointed out to me that there's not much you can really do with Bitcoin right now, and that they're sceptical of it because they're more pragmatic than men, better able to override their own egos and see through their own hype. Indeed, even the much-touted notion that Bitcoin allows you to escape the watchful eyes of the NSA carries with it a slightly egotistical belief that the NSA would somehow <i>care</i>&nbsp;what you're doing.</div><div style="text-align: justify;"><br /></div><br /><div style="text-align: center;"><h4 style="text-align: left;"><b>Explanation 4: The growing culture of anarcho-capitalist brutalism</b></h4></div><div style="text-align: justify;">Ok, so let's get more controversial.&nbsp;<a href="https://twitter.com/Revsgaard/status/400990622783246336">Tune</a>&nbsp;and&nbsp;<a href="https://twitter.com/ericmbudd/status/400990676336144384">Eric</a>&nbsp;suggested that women are repelled by Bitcoin, not because of them thinking it's stupid, but by the large numbers of libertarian/anarcho-capitalists in the scene, and the increasingly aggressive culture that surrounds it.</div><blockquote class="twitter-tweet" data-conversation="none" lang="en"><a href="https://twitter.com/Suitpossum">@Suitpossum</a> Always thought the same. Maybe because of the big Ancap-concentration around <a href="https://twitter.com/search?q=%23bitcoin&amp;src=hash">#bitcoin</a>. Not many woman round that lot!<br />— Tune Revsgaard (@Revsgaard) <a href="https://twitter.com/Revsgaard/statuses/400990622783246336">November 14, 2013</a></blockquote><script async="" charset="utf-8" src="//platform.twitter.com/widgets.js"></script> <br /><div style="text-align: justify;">Don't get me wrong. I enjoy some elements of the balls-to-the-wall bravado of the libertarian ethos, and it makes for a decent self-help philosophy. But, it can also have the side-effect of attracting those who already feel empowered (or who feel entitled to power). Let's not beat around the bush: in its&nbsp;hardest&nbsp;right-wing formulations it is a philosophy for why being individually powerful <i>relative to others</i> is also morally right, carrying a certain brutalism, and a winner-takes-all, screw-the-weak callousness which is more likely to take root with someone already thinking in an aggressive patriarchal frame. I always sense that it naturally appeals to those who feel they are on the cusp of power that they are entitled to, but that has not yet fully come due... like <a href="http://simulacrum.cc/2013/03/04/the-demographics-of-bitcoin-part-1-updated/">32 year old men</a> for example.<br /><br /><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://farm6.staticflickr.com/5149/5662533120_c83d74d3fd_z.jpg" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" src="http://farm6.staticflickr.com/5149/5662533120_c83d74d3fd_z.jpg" height="266" width="400" /></a></td></tr><tr><td class="tr-caption" style="font-size: 13px; text-align: center;">FEEL MY POWER! RESPECT ME!</td></tr></tbody></table>Let's face it - Ayn Rand <a href="http://en.wikipedia.org/wiki/Objectivism_and_homosexuality">ain't a feminist hero</a>. Not only did Rand state that "an ideal woman is a man-worshipper", but Randian libertarianism glorifies the myth of a <a href="http://en.wikipedia.org/wiki/Atlas_(mythology)">Greek deity</a> holding the world up on HIS shoulders. Later scientists actually discovered that the world held itself together - and that deities themselves were constructions built by ordinary people - but the <a href="http://en.wikipedia.org/wiki/John_Galt">John Galt</a> myth persists, and being around so many people who have a belief that the world should rightfully be dominated by those who are most powerful, well-educated or aggressive enough to claw their way up the ladder, probably isn't that welcoming for say... many women, ethnic minorities, or pretty much anyone that's experienced the brunt of being on the wrong side of power historically.<br /><br />(<i>Additional note 17th January</i>: For an example of this mentality, check out <a href="http://bitcoinmonger.tumblr.com/post/67985188712/beggars-can-be-choosers">this post</a> by a newly minted Bitcoin baron, thinly masquerading as a story of societal empowerment whilst dripping in triumphalist, patronising scorn for his girlfriend, her 'dumb friends' and the female coffee barista who is too stupid to have 'got in early' like him. Classic quote: <i>"Unlike some of the other early ones, I fortunately — God is merciful — do not have a wife. What I have is a long-term girlfriend, and I’m under no legal obligation to spend any of my hoard to impress her dumb friends."</i>)<br /><br /></div><div style="text-align: justify;">(<i>Side note</i>: Interestingly, women are pioneers in the so-called <i><a href="http://en.wikipedia.org/wiki/Sharing_economy">sharing economy</a></i>, which conservative Milo Yiannopoulos slated as an "<a href="http://thenextweb.com/insider/2013/06/06/dont-believe-the-hype-heres-whats-wrong-with-the-sharing-economy/">emasculating, dispiriting and demotivating</a>" realm of insipid do-gooders. Poor Milo, frightened by the thought of his manhood being threatened by people actually wanting to co-operate and share stuff.)<br /><br /></div><br /><div style="text-align: center;"><h4 style="text-align: left;"><b>Explanation 5: The cultural dynamics of the technology scene</b></h4></div><blockquote class="twitter-tweet" data-conversation="none" lang="en"><a href="https://twitter.com/Suitpossum">@Suitpossum</a> Coz it's tech...<br />— Antonie Fountain (@antonie) <a href="https://twitter.com/antonie/statuses/400991230034980864">November 14, 2013</a></blockquote><div style="text-align: justify;"><script async="" charset="utf-8" src="//platform.twitter.com/widgets.js"></script> <a href="https://twitter.com/antonie/status/400991230034980864">Antonie here</a>&nbsp;offers this apparently self-explanatory reason for crypto-patriarchy. He's not unique in holding this viewpoint. It's frequently repeated, not just about Bitcoin, but about the entire technology sector. This is a complex issue that I cannot do justice to in a single post, but it raises the question about whether crypto-patriarchy is actually due to something intrinsic to Bitcoin, or whether it is just a localised version of a much more widespread problem of women not being culturally encouraged to get involved in technology.<br /><br /></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://2.bp.blogspot.com/-ZgWaQnay7iE/Us_wooAFmaI/AAAAAAAACGo/8kyRHcpfowI/s1600/Gender+stereotypes.bmp" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://2.bp.blogspot.com/-ZgWaQnay7iE/Us_wooAFmaI/AAAAAAAACGo/8kyRHcpfowI/s1600/Gender+stereotypes.bmp" height="326" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">MAN=MONEY/TECH/POWER/SEX/MUSCLES &nbsp; &nbsp; &nbsp;WOMAN=SUBMISSIVE ANOREXIC SHOPPER</td></tr></tbody></table><div style="text-align: justify;"><br /><div>It's an issue that&nbsp;<a href="http://www.theguardian.com/women-in-leadership/2013/nov/15/womens-magazines-ignoring-tech">this article</a>&nbsp;addresses very well. Consider the imagery of the magazines above. Women's magazines almost never promote interest in technology as normal, whereas men's magazines always do. The key question here is whether such magazines are presenting a <i>descriptive</i> account of the world ("we merely reflect what women want to see"), or a <a href="http://en.wikipedia.org/wiki/Normative"><i>normative</i></a> one ("Oh, and we implicitly reinforce the idea that what we project is normal, or how things OUGHT to be").</div></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><i>Descriptively </i>though,&nbsp;it's inaccurate that women are 'not into' technology. During the world wars, for example, historically constructed gender roles were disrupted as <a href="http://en.wikipedia.org/wiki/Women's_roles_in_the_World_Wars#Women_in_the_Workplace">women took up industrial jobs</a>&nbsp;(leading to a backlash after men returned home from wars). And as <a href="http://www.theguardian.com/science/2013/oct/24/open-access-harassment-science-technology-and-women">Alice Bell and Georgina Voss note</a>, "Whilst programming was originally ‘<a href="http://www.smithsonianmag.com/smart-news/computer-programming-used-to-be-womens-work-718061/">woman’s work</a>’, it morphed into a male dominated field where hiring practices actively discriminated against women, setting up the straw man of the geeky, asocial male coder".<br /><i><br /></i><i>Normatively</i>, of course, the idea that it's not "women's natural place" to be involved in technology runs into a conflict of interest: It's strangely convenient for men that women are naturally 'not interested' in getting involved in anything associated with power, isn't it? It reminds me a bit of the apartheid history of my home country South Africa, where apparently black people '<a href="http://en.wikipedia.org/wiki/Bantu_Education_Act,_1953">didn't have an aptitude</a>' for doing maths or science, so were trained to do things like, um, minimum wage mine labouring.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><div style="text-align: center;"><h4 style="text-align: left;"><b>"Nobody's stopping you": Negative Freedom and t</b><b>he Moshpit Effect</b></h4></div><div style="text-align: center;"><b><br /></b></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://www.danwitz.com/files/12-big-mosh-pit-2007-copy.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://www.danwitz.com/files/12-big-mosh-pit-2007-copy.jpg" height="320" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">"JOIN IN, NOBODY'S STOPPING YOU"</td></tr></tbody></table><div style="text-align: justify;"><br /></div><div style="text-align: justify;">When pushed about this issue, some Bitcoin enthusiasts irritatedly say "nobody's stopping women from joining". '<i>Nobody is stopping you'&nbsp;</i>is&nbsp;the classic articulation of&nbsp;<a href="http://en.wikipedia.org/wiki/Negative_liberty">negative freedom</a>, and&nbsp;its problems are best exemplified by <a href="http://en.wikipedia.org/wiki/Moshing">the moshpit</a>. <i>Nobody is stopping you</i> from entering the moshpit, but you're only likely to enter if you feel encouraged to, or if you feel you'll be free of victimisation and subtle disapproval. It's the same feeling a young woman feels walking past a pub full of leery men eyeing her. <i>Nothing's stopping you entering</i>, except that condescending projection of de-facto power the men implicitly thrive upon. <i>'Come in darling... if you dare'.</i></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">I personally love moshpits - and perhaps we need such spaces in society for men to vent their excess aggression - but there's no doubting that they are wired towards disenfranchising women of their place on the dance-floor. Sure, you occasionally get the punk-rocker <a href="http://en.wikipedia.org/wiki/Riot_grrrl">riotgrrrl</a> who sets out to prove that she outdo the boys, but the parameters of the social conversation are very clearly set by the male action. The stark fact is that most women will simply be barged out of the way, repelled by the sweaty oafs, and just retreat to watch the band from the outskirts.</div><div style="text-align: justify;"><blockquote class="twitter-tweet" data-conversation="none" lang="en"><a href="https://twitter.com/Suitpossum">@Suitpossum</a> I'm so sick of arguing with men about bitcoin. I'm reluctant to mention mutual credit for fear of aggro bitcoin freaks.<br />— Annette Loudon (@niftycorp) <a href="https://twitter.com/niftycorp/statuses/423034952553201664">January 14, 2014</a></blockquote><script async="" charset="utf-8" src="//platform.twitter.com/widgets.js"></script> Moshpits are a comparatively harmless example of the problems of negative freedom, limited to certain ritualistic times and places. But if the principles of the moshpit are found in what is supposed to be an inclusive global exchange system, you've got problems. <i>I think that Bitcoin is turning into a covert form of monetary partriarchy</i>. It may define itself against a status quo, but if you're going to challenge one power structure, don't make it at the expense of accepting another. You don't dig big government and big banks? Why then tolerate male domination?</div><div style="text-align: justify;"><br /><br /></div><div style="text-align: justify;"><h4><b>The myth of apolitical neutrality</b></h4><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://th09.deviantart.net/fs71/PRE/f/2011/170/5/2/ode_to_the_bouncer_by_voodoodollz13-d3jdn9c.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://th09.deviantart.net/fs71/PRE/f/2011/170/5/2/ode_to_the_bouncer_by_voodoodollz13-d3jdn9c.jpg" height="385" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">STRAW MAN: IT'S NOT ABOUT THE BOUNCER</td></tr></tbody></table><br />The comeback from the hard libertarian is likely to be that Bitcoin is an apolitical commodity, 'free from intervention', that 'everyone's free to join', that 'we're all adults', that it's <i>neutral</i>, and that they have no time for wishy-washy political correctness.<br /><br />The average problem with the average libertarian though (and by this I mean someone who comes to such ideals not via a critical intellectual process, but because they like the sound of it), is that they're hypersensitive towards recognising <i>overt forms of power</i> - like the bouncer standing at the nightclub door - but have muted ability (or desire) to recognise <i>implicit forms of power</i>, the subtle structures of exclusion that actually do most of the work in maintaining a status quo.<br /><br />They assume that in the absence of the bouncer there's a level playing field. <i>'There's no bouncer stopping you entering'</i>. They fail to see that most people will be repelled from the nightclub not by the bouncer, but by things like a lack of money, or a lack of cultural access, or by the perception that they <i>don't belong</i> there. The Ritz doesn't even need bouncers. Those without power naturally shrink away from it. Or, in the immortal words of Withnail:</div><div style="text-align: justify;"><br /><table cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://s3.amazonaws.com/criterion-production/stills/131233-016f53bb2957ab5534687e3bf3f536d3/Film_119w_WithnailAndI_original.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://s3.amazonaws.com/criterion-production/stills/131233-016f53bb2957ab5534687e3bf3f536d3/Film_119w_WithnailAndI_original.jpg" height="225" width="400" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">"FREE TO THOSE WHO CAN AFFORD IT, VERY EXPENSIVE TO THOSE WHO CAN'T"</td></tr></tbody></table><br />Indeed, <i>in the context of a non-level playing field, not making an overt effort to include is just a subtle (albeit non-deliberate) form of exclusion</i>. As Howard Zinn puts it:<br /><blockquote class="tr_bq">" ... it is impossible to be neutral. In a world already moving in certain directions, where wealth and power are already distributed in certain ways, neutrality means accepting the way things are now."</blockquote>When men say that women are just different, or just not interested, it's normally just a convenient mask for the fundamental lack of concern about whether they're included. If the discussants on <a href="https://bitcointalk.org/index.php?topic=382267.0">this forum</a> are to be taken seriously, it seems that women's current designated role in the Bitcoin community appears to be as&nbsp;cheerleaders for the men, girlfriends of Bitcoin millionaires, or&nbsp;<a href="http://www.youtube.com/watch?v=iqbScnkmf0s">singers of songs of the Bitcoin heroes</a>&nbsp;(no disrespect intended towards the musicians).&nbsp;To my knowledge, the only site focused on Women &amp; Bitcoin is <a href="http://thebitcoinwife.com/">The Bitcoin Wife</a>, a great site, but focused mostly on the concept of women as (married) consumers.<br /><br />And while I've had pushback from women in the Bitcoin scene who say most of the guys are friendly, I also question how much someone could raise an issue of discrimination before being frowned upon as an unwelcome element. This is a big problem in mainstream finance, where women often don't report discrimination for fear of being seen as 'whiners' (why do I keep thinking of&nbsp;<a href="http://en.wikipedia.org/wiki/Stockholm_syndrome">Stockholm Syndrome</a>?).<br /><br /></div><h4 style="text-align: left;"><b><br /></b></h4><h4 style="text-align: left;"><b>So, what should be done? Combating Bitcoin inequality</b></h4><div style="text-align: justify;"><br />The material from this article is drawn from my talk at the London Bitcoin Expo. After my talk I was approached by a man of African descent who was working as the doorman. He thanked me for addressing the issue. My topic of gender exclusion resonated with forms of exclusion he'd experienced in his own life. He'd been standing all day watching comparatively wealthy white men talk about the earth-shattering potential of BTC.<br /><br /></div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="http://31.media.tumblr.com/tumblr_m26wsu8X2t1rtvru8o1_400.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://31.media.tumblr.com/tumblr_m26wsu8X2t1rtvru8o1_400.jpg" height="235" width="400" /></a></div></div><div style="text-align: justify;"><br />It's important to stress though, that this problem is found throughout society, not just in Bitcoin. All sorts of groups are marginalised from the broader technology scene (for an interesting, semi-conservative take on that, see '<a href="http://www.weeklystandard.com/articles/silicon-chasm_768037.html">Silicon Chasm: The class divide on America's cutting edge</a>'). Interestingly, one technology area that does have a more inclusive vibe is&nbsp;<a href="http://en.wikipedia.org/wiki/Information_and_communication_technologies_for_development">ICT4D</a>, which explicitly defines itself by a deliberate attempt to include women and poorer communities in technologies that are otherwise prone to being the preserve of elites making themselves wealthier.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">It's also important to stress though, that I'm not claiming there is a <i>deliberate</i> attempt on the part of men to exclude others. People with privilege are frequently prone to seeing the world as a flat, level playing field, and it takes practice for them to see the hidden barriers that others face on a day-to-day basis. So, here are a few things I personally wish the Bitcoin (and wider tech) community would implement:</div><div style="text-align: justify;"></div><ol><li style="text-align: justify;">I wish the community would stop denying that there is a problem</li><li style="text-align: justify;">I wish the community would stop repeating self-serving dogma like 'women don't like tech'</li><li style="text-align: justify;">I wish the community would stop having <i><a href="http://www.youtube.com/results?search_query=bitcoin+conference+panel&amp;sm=3">all male panel discussions</a> - </i>no wonder women don't want to get involved if they're constantly faced with a wall of male faces</li><li style="text-align: justify;">I wish the community would make a collective and concerted effort to identify, build up and showcase female role models&nbsp;</li></ol><div style="text-align: justify;">Similar dynamics are found when considering ethic minority youth in countries like the UK. The old successful man throws his hands in the air and says "Why don't black teenagers express any interest in a career in law?". <i>Um, have you ever thought that maybe they don't relate to people like you, don't feel included by people like you, cannot imagine themselves being like you, and mostly view lawyers as being figures of white oppression?</i> Developing role models is vital to developing people's&nbsp;<i>desire</i>&nbsp;to participate.<br /><br />So yes, can we break out of the passive negative freedom mode of "nobody's stopping you", and enter into an active <i><a href="http://en.wikipedia.org/wiki/Positive_liberty">positive freedom</a></i>&nbsp;mode, which involves deliberately seeking inclusion, and deliberately building up people's capacity to act on their potential freedom? And, if this doesn't happen, think about how dreary, bloated and conservative it's going to be in 10 years time.<br /><br /><br /><hr style="background-color: white; color: #0a0000; font-family: Arimo; font-size: 14px; line-height: 19.6000003814697px; text-align: left;" /><h3 style="background-color: white; color: #0a0000; font-family: Arimo; margin: 0px; position: relative; text-align: left;"></h3><h3 style="background-color: white; color: #0a0000; font-family: Arimo; margin: 0px; position: relative; text-align: left;">Some things to do if you enjoyed this article...</h3><div style="background-color: white; color: #0a0000; font-family: Arimo; font-size: 14px; line-height: 19.6000003814697px; text-align: left;">I sometimes spend weeks writing these articles, and don't generally get paid to do it, so if you enjoyed please consider doing one or two of the following</div><ol style="background-color: white; color: #0a0000; font-family: Arimo; font-size: 14px; line-height: 19.6000003814697px; text-align: left;"><li style="margin: 0px 0px 0.25em; padding: 0px;">Support by&nbsp;<a href="http://suitpossum.blogspot.co.uk/p/support.html" style="color: #ff9900; text-decoration: none;">buying me a virtual beer</a></li><li style="margin: 0px 0px 0.25em; padding: 0px;">Submit to&nbsp;<a href="http://www.reddit.com/" style="color: #ff9900; text-decoration: none;">Reddit</a></li><li style="margin: 0px 0px 0.25em; padding: 0px;">Link to the article from your own blog so your readers can see it too</li></ol></div></div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/JFs4pHTkutA" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com79http://suitpossum.blogspot.com/2014/01/crypto-patriarchy-problem-of-bitcoins.htmltag:blogger.com,1999:blog-6454624189383327908.post-20191800012201575012013-12-15T13:51:00.002+00:002016-12-22T18:34:19.362+00:00Seedbombing: Applying the Principles of Permaculture to Finance<div dir="ltr" style="text-align: left;" trbidi="on"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://fc07.deviantart.net/fs70/i/2013/076/4/8/eco_bomb_by_ler_ac-d2t4wvm.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="400" src="https://fc07.deviantart.net/fs70/i/2013/076/4/8/eco_bomb_by_ler_ac-d2t4wvm.jpg" width="317" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><br /></td></tr></tbody></table><div style="text-align: justify;"><hr /><i>I originally wrote this article for&nbsp;<a href="http://transitionfreepress.org/2013/12/08/were-now-officially-published-and-being-read-in-all-the-right-places/">Transition Free Press Edition 4</a>. It's published under a Creative Commons licence (see side panel for details)</i><br /><hr /><i><br /></i>Finance, even in its most high-tech formulations, is rooted in ecological systems. A high-frequency trading hedge fund, for example, relies on electricity created by burning fossillised organic matter. It relies on employees, surviving via agricultural systems. It trades in company shares, given value by the actions of those companies’ employees using assets (like computers and telecommunications systems) that are all dependent (at some level) on mining, forestry, and other extractive industries.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The financial system has been a net drain on ecological systems though. Finance involves steering economic energy – symbolised in money – in an attempt to generate a yield over time. For example, investors may steer money via financial instruments like shares and bonds into economic activities, and attempt to extract returns in the form of dividends and interest. They aim to extract the highest short-term yield, from the minimum amount of expenditure, preferably at the lowest possible levels of risk.<br /><br /></div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="http://images.thenews.com.pk/updates_pics/3-30-2011_13068_l_u.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="240" src="https://images.thenews.com.pk/updates_pics/3-30-2011_13068_l_u.jpg" width="400" /></a></div><br /></div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div>Permaculture is a body of thought that attempts to build ecological dynamics into design. A permacultural designer entirely understands the idea of obtaining a yield from the earth by investing time and energy, but the key difference is that they attempt to do so without undermining ecological balance. The focus is on mutualistic integration with ecologies, acting in accordance with natural regenerative processes rather than parasitically exploiting them. So can we use <a href="http://en.wikipedia.org/wiki/Permaculture#Twelve_design_principles">permacultural principles</a> to design financial instruments and institutions?</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><b>Cultivating long term balance</b></div><div style="text-align: justify;">A classic example of a parasitic financial institution is a <a href="http://en.wikipedia.org/wiki/Payday_loans_in_the_United_Kingdom">payday lender</a>. The payday loan company is fixated with the short-term risks presented by a vulnerable borrower, and exploits that by demanding the highest possible interest rate from them. In so doing they further exhaust the community around them and increase deprivation. It’s akin to overfishing an already fragile river system, thereby further disrupting the ecological balance.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The permacultural designer, whether they are looking at fisheries or financial inclusion, will seek instead to build up the productive potential of the overall system. A permacultural financier thus looks to strengthen vulnerable borrowers, working with them to improve their credit-worthiness. The <a href="http://www.permaculturecu.org/">Permaculture Credit Union</a> in Santa Fe is one such example of a regenerative financial institution. If we think in terms of economic energy, they aim to cultivate long-term energy balance, rather than extracting maximum short-term energy before collapse.</div><br /><b>Observe and interact</b><br /><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="http://cvnfarm.org/wp-content/uploads/2013/08/permaculture-design-principles.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="400" src="https://cvnfarm.org/wp-content/uploads/2013/08/permaculture-design-principles.jpg" width="288" /></a></div><div style="text-align: justify;">But how do we get to a point of designing such systems? Anyone familiar with permaculture knows that it has 12 principles of design. The first, and perhaps most important, principle is ‘observe and interact’. Mainstream financial institutions such as large banks pay little attention to the cultural nuances of the communities they descend upon, and their designers certainly do not interact with such communities in any meaningful sense. They offer standardised products and services, no matter where they are, and in areas where these don’t work, the banks are simply not found (known as ‘financial exclusion’).</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Alternative finance practitioners need to be attuned to the needs of their environment. I recently held a workshop at Shambala Festival where we explored the idea of building a pop-up currency for the duration of the festival. Several participants suggested we create something like the <a href="http://brixtonpound.org/">Brixton Pound</a>, a local currency used for commerce in South London. The point of the Brixton Pound though, is to harness economic energy that would otherwise flow out of Brixton. The economic ecosystem of Shambala Festival, unlike Brixton, is already inherently local, so there is minimal need to introduce such a currency into that environment. To build something more interesting requires a much deeper observation of why people are at the festival (it’s not for commerce, for example), and how a different system of exchange might add a new dimension to that experience.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">In anthropological terms, we might call this as ‘participant observation’, where you engage in slow observation and interaction with a particular cultural environment to experience the nuances. Through this process one can begin to get a feel for how a more integrated, inclusive, and interactive system can be built. A key problem in modern finance is just how disconnected people feel from it. Consider the average high-street bank. The people standing in the queue or <a href="http://suitpossum.blogspot.co.uk/2013/10/atm-hacking-and-art-of-hole-in-wall.html">using the ATM</a> often appear utterly disconnected from the process. They often don’t know where the money comes from, or where it goes to. By contrast, a simple peer-to-peer lending platform like <a href="https://www.abundancegeneration.com/">Abundance Generation</a> – which allows you to lend directly to renewable energy projects – has reconnection embedded into its design.</div><br /><b>Zones and diversity</b><br /><div class="separator" style="clear: both; text-align: center;"></div><div style="text-align: justify;">Permaculturists are intensely interested by the flows of energy within and between different ecological zones and how to balance it. For example, in agricultural design, they’re thinking about how the household interacts with the immediate garden, and how the garden interacts with the zone of semi-wilderness beyond. They’re seeking synergies between the diverse components. This fostering of diversity is fundamental for building resilience (not having ‘all one’s eggs in one basket’), but the interrelations between diverse parts is also viewed as a source of creativity.</div><div style="text-align: justify;"><br /></div><div class="separator" style="clear: both; text-align: center;"></div><div style="text-align: justify;">The mainstream financial sector is the ultimate monoculture. Not only is it not resilient, but it’s also not very creative or responsive to change. The banking sector is generally only good at one thing: extracting short-term profit whilst concentrating power in a single set of large institutions. What we rather need is something akin to an <a href="http://suitpossum.blogspot.co.uk/2013/11/building-creative-commons-five-pillars.html">‘open source’ financial movement</a>, where that power is spread out to networks of smaller institutions, where access to financial services is widened, and where the means of producing financial services is extended to people who previously had little input. Local banking is one important element of this ethos, but we also catch glimpses of it in the array of niche crowdfunding platforms that have emerged, offering financing opportunities to projects that most banks would ignore.</div><br /><b>Financial holism</b><br /><div style="text-align: justify;">At the core of permaculture is holism. Much mainstream thought encourages people to box aspects of their lives into intellectual silos, like ‘my economic life’ and ‘my political life’. That’s a terrible way to start a design process, because it ignores the inherently multifaceted nature of all our actions, and that we are always balancing various objectives and values. For example, a large national currency may be very efficient for exchange, but that very same efficiency can act to atomise individuals by weakening the ties of trust that would otherwise be required for exchange. Thus, rather than seeking to design for single, specialised and segregated uses (maximising a particular outcome), a permacultural designer seeks out holistic optimisation: For example, how does one create a currency that achieves efficiency without alienating people from one another? Can a local currency like the <a href="http://bristolpound.org/">Bristol Pound</a> blend the efficiency of mobile payment with the goal of energising local community exchange?</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Very importantly, holism also involves integrating yourself into the design process, rather than imagining yourself as an objective outsider. Activists taking on the financial sector spend much time pitching themselves against the system, but frequently take little time to see how they personally form part of it. Have you ever wondered how the mainstream financial sector imprints itself and replicates itself in your own thoughts about exchange, and in the language you use? Much of the power of the financial system is predicated on people unconsciously deferring power to it without realising it. True holism, and the key to unveiling the hidden design principles in existing systems, is as much about observing yourself as it is about observing Canary Wharf. Think about it next time you take the note out of your wallet.</div><div><div style="text-align: justify;"><br /></div><br /></div><b>Seedbombing the Frontiers of Ecological Finance</b><br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="http://www.inhabitat.com/wp-content/uploads/seedbombs-ed01.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="301" src="https://www.inhabitat.com/wp-content/uploads/seedbombs-ed01.jpg" width="400" /></a></div><br /><div style="text-align: justify;">So how does the aspiring permacultural designer start making their visions a reality in the financial sector? After all, if you're surrounded by a monoculture it's hard to seed new ideas. It's helpful in this context to take inspiration from the <a href="http://en.wikipedia.org/wiki/Guerrilla_gardening">guerilla gardening</a> movement, and in particular their technique of <a href="http://en.wikipedia.org/wiki/Seed_bombing">seedbombing</a>.&nbsp;Seedbombing is the act of chucking compressed bundles of seeds into rigidly controlled gardens. Most of the seeds don't make it, but it's fun to try, and what's more, every now and again one actually establishes an outpost for itself.<br /><br />Using this as an analogy for economic change, we need to constantly create portfolios of alternatives and throw them into society, learning from what works and what doesn't. That's how great institutions like <a href="http://www.ecology.co.uk/">Ecology Building Society</a>&nbsp;got started - a group of people with an idea went ahead and just did it. These solutions are often small, but that's the point. We don't want to replace one monoculture with another monoculture. The ideal is to create a rich, responsive jungle of creative and resilient services, rooted into the reality of their local context.<br /><br /><b>Postscript...</b><br />After I wrote this article I went to Totnes to talk on the topic at an event organised by <a href="http://www.transitiontowntotnes.org/">Transition Town Totnes</a>, <a href="http://www.schumachercollege.org.uk/">Schumacher Colllege</a> and <a href="http://www.reconomy.org/">Totnes REconomy Project</a>. You can see the video below. I also discovered the <a href="http://www.financialpermaculture.com/">Financial Permaculture Institute</a>&nbsp;and <a href="http://www.perennialsolutions.org/financial-permaculture-organizing-communities-to-manage-resources-with-perennial-objectives-ends.html">Perennial Solutions</a>&nbsp;which have looked at this topic before, so check them out too.&nbsp;Cheers</div><br /><iframe allowfullscreen="" frameborder="0" height="281" src="//www.youtube.com/embed/iaUoLrgT3RQ" width="500"></iframe> <br /><br /></div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/Hsf6YrzY32o" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com0http://suitpossum.blogspot.com/2013/12/seedbombing-applying-principles-of.htmltag:blogger.com,1999:blog-6454624189383327908.post-3686031985957608282013-11-29T15:36:00.001+00:002014-12-05T17:14:13.135+00:00Building Creative Commons: The Five Pillars of Open Source Finance<div dir="ltr" style="text-align: left;" trbidi="on"><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://2.bp.blogspot.com/-OVLoeMnkmjU/U86CDPN6hJI/AAAAAAAACNQ/-VlXXZrHgzI/s1600/Copyleft.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://2.bp.blogspot.com/-OVLoeMnkmjU/U86CDPN6hJI/AAAAAAAACNQ/-VlXXZrHgzI/s1600/Copyleft.png" height="213" width="320" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">AHOY, THERE BE A CLOSED SYSTEM TO OPEN</td></tr></tbody></table><br />This is an article about Open Source Finance. It's an idea I first sketched out at a&nbsp;<a href="https://soundcloud.com/theodi/odi-fridays-open-source">talk</a>&nbsp;I gave&nbsp;at the&nbsp;<a href="http://theodi.org/">Open Data Institute</a>&nbsp;in London. By 'Open Source Finance', I don't just mean open source software programmes. Rather, I'm referring to something much deeper and broader. It's a way of framing an overall change we might want to see in the financial system. To illustrate this, I set up an analogy between computer systems and economic systems, and I then explore what financial 'code' might be. I then sketch out the five pillars that could underpin an open finance movement.<br /><br /><iframe frameborder="no" height="166" scrolling="no" src="https://w.soundcloud.com/player/?url=https%3A//api.soundcloud.com/tracks/115286885&amp;color=ff6600&amp;auto_play=false&amp;show_artwork=true" width="100%"></iframe><br /><br /><br /></div><div style="text-align: justify;"><div style="text-align: center;"><b>Computer systems as economies</b></div></div><div style="text-align: justify;">Computer systems are great metaphors for economic systems. That's because, in a sense, a computer is a microcosm of our economy, albeit one that is a lot more predictable and controllable. Economies, at some basic level, are based upon people using energy to extract useful stuff from the earth, using tools, procedures, systems of rules and labour to activate the earth's productive potential. Likewise, computer systems rely on taking inputs of energy (the computer plugged into the electricity grid) and combining it with software code (a kind of abstraction of human organisation), in order to activate the assemblage of physical hardware (signifying a latent productive potential) towards productive tasks, when willed to do so by a user of the computer.</div><div style="text-align: justify;"><br />We constantly interact with computers, but most people in the world do not perceive themselves as programmers of computers. They mostly perceive themselves as users of computers that others have programmed. And even if they wanted to dig deeper, they'd find that much of the software they use is proprietary, locked up in secretive, opaque, even <a href="https://en.wikipedia.org/wiki/Obfuscation_(software)">obfuscated</a> formations. Windows looks like a friendly interface, but you cannot see what it does, or how it does it. It's a useful intermediary interface between you and the inner workings of your computer, but it's also a hard-shelled barrier.<br /><br /><br /></div><div style="text-align: justify;"><div style="text-align: center;"><b>The Financial Status Quo: Power concentrated in intermediaries</b><br /><b><br /></b></div></div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="http://digiscape.files.wordpress.com/2009/05/08112007_sketch-7-10-07-ne5-sketch-2-passivity1.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://digiscape.files.wordpress.com/2009/05/08112007_sketch-7-10-07-ne5-sketch-2-passivity1.jpg" height="400" width="350" /></a></div><br />Software code is the organising rule system that steers energy into activating hardware towards particular ends. So, extending this as an analogy, what might financial 'code' look like? A financial system, in a basic sense, is supposed to arrange for surplus resources (extracted from the earth), to be redistributed (in the form of money) via financial instruments (often created by financial intermediaries like banks and funds), into new economic production activities ('investments'), in exchange for a return over time.<br /><br />Here, for example, is a rough financial circuit: A person manages to earn a surplus of money (a symbolic claim on real things in the world), which they deposit into a pension fund, which in turns invests in shares and bonds (which are conduits to the real world assets of a corporation), which in turn return dividends and interest over time back to the pension fund, and finally back to the person.<br /><br />Shares and bonds are extractive financial conduits that plug into a corporate structure, but if you look for how they are coded, you'd discover they are built from legal documents that are informed by regulations, acts of parliament, and social norms. They are supported by IT systems and all manner of payments systems and auxiliary services.<br /><br />But it takes more than clearly-worded documentation to be able to create financial instruments. The core <i>means of financial production</i>, by which we mean the things that allow people to produce financial services (or build financial instruments), includes having access to networks of investors and companies, having access to specialist knowledge of financial techniques, and having access to information. It's these elements that banks and other financial intermediaries really compete over: They battle to monopolise relationships, monopolise information, and to monopolise specialist knowledge of financial techniques.<br /><br />And indeed, that's why production of financial services mostly occurs within the towering concrete skycrapers of the 'financial sector', spinners of the webs of the code that is mostly unknown to most people. We have very little direct access to the&nbsp;means of financial production&nbsp;ourselves, very little say in how financial institutions choose to steer money in society, and very little ability to monitor them.<br /><br />We have, in essence, a situation of <i>concentration of power</i> in financial intermediaries, who in turn reinforce and seek to preserve that power structure. And while I may be happy to accept a concentration of power in small specialist industries like Swiss watchmaking, a concentration of power in the system responsible for redistributing human society's collective resources into new investments is not a good thing. It's systematically breaking our planetary hardware by steering money into destructive activities, whilst helping to fuel a culture of bland individualistic materialism in increasingly atomised communities.<br /><br /></div><div style="text-align: justify;"><br /><div style="text-align: center;"><b style="text-align: left;">Opening access, reconnecting emotion, liberating creativity</b></div><b style="text-align: left;"><br /></b></div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="http://metametameta.net/wp-content/uploads/2013/05/copyleft-albatross-balancedwhites-938px.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://metametameta.net/wp-content/uploads/2013/05/copyleft-albatross-balancedwhites-938px.jpg" height="400" width="315" /></a></div><br /></div><div style="text-align: justify;"><div>The Open Source movement started with software - and in particular with the concept of&nbsp;<a href="https://en.wikipedia.org/wiki/Copyleft">copyleft</a>&nbsp;and free licensing -&nbsp;but the principles extend far past software. At core, Open Source is a philosophy of <i>access</i>:&nbsp;access to the underlying code of a system, access to the means of producing that code, access to usage rights of the resultant products that might be created with such code, and (in keeping with the viral quality of copyleft) access to using those products as the means to produce new things. Perhaps the ethos is best illustrated with the example of <i>Wikipedia</i>. Wikipedia has:</div><div><ol><li style="text-align: justify;">A <i>production process</i> that encourages participation and a sense of common ownership: We can contribute to Wikipedia. In other words, it explicitly gives us access to the means of production</li><li style="text-align: justify;">A <i>distribution process</i> that encourages widespread access to usage rights, rather than limited access: If you have an internet connection you can access the articles. We might call this a <i>commons</i></li><li style="text-align: justify;">An <i>accountability model </i>that offers&nbsp;the ability to monitor and contest changes: An open production process is also one that is more transparent. You can change articles, but people can monitor and contest your changes</li><li style="text-align: justify;">A <i>community</i> built around it that maintains the ethic of collaboration and continued commitment to open access. It's more than just isolated individuals, it's a culture with a (roughly) common sense of purpose</li><li style="text-align: justify;"><i>Open source code </i>that can be accessed and altered if the current incarnation of Wikipedia doesn't suit all your needs. Look, for example, at <a href="http://rationalwiki.org/wiki/Main_Page">RationalWiki</a> and <a href="http://www.sikhiwiki.org/index.php/Main_Page">SikhiWiki</a></li></ol><div>You can thus take on five conceptually separate, but mutualistic roles: Producer, consumer, validator, community member, or (competitive or complementary) breakaway. And these same five elements can underpin a future system of Open Source Finance. I'm framing this as an overall change we might want to see in the financial system, but perhaps we are already seeing it happening. So let's look briefly at each pillar in turn.<br /><br /></div></div><br /></div><div style="text-align: justify;"><div style="text-align: center;"><b>Pillar 1: Access to the means of financial production</b></div></div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="http://info.means-of-production.com/Portals/179740/images/logo.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://info.means-of-production.com/Portals/179740/images/logo.png" height="238" width="400" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div>Very few of us perceive ourselves as offering financial services when we deposit our money in banks. Mostly we perceive ourselves as passive recipients of services. Put another way, we frequently don’t imagine we have the capability to produce financial services, even though the entire financial system is foundationally constructed from the actions of small-scale players depositing money into banks and funds, buying the products of companies that receive loans, and culturally validating the money system that the banks uphold. Let’s look though, at a few examples of prototypes that are breaking this down:<br /><ol><li><a href="https://en.wikipedia.org/wiki/Peer-to-peer_lending">Peer-to-peer finance models</a>: If you decide to lend money to your friend, you directly perceive yourself as offering them a service. P2P finance platforms extend that concept far beyond your circle of close contacts, so that you can directly offer a financial service to someone who needs it. In essence, such platforms offer you access to an active, direct role in producing financial services, rather than an indirect, passive one.</li><li style="text-align: justify;">There are many interesting examples of actual&nbsp;<a href="http://en.wikipedia.org/wiki/List_of_free_and_open-source_software_packages#Finance">open source financial software</a>&nbsp;aimed at helping to fulfil the overall mission of an open source financial system. Check out&nbsp;<a href="http://en.wikipedia.org/wiki/Mifos">Mifos</a>&nbsp;and&nbsp;<a href="http://www.cyclos.org/">Cyclos</a>, and <a href="https://drupal.org/project/cforge">Hamlets</a> (developed by&nbsp;<a href="http://communityforge.net/">Community Forge's</a>&nbsp;Matthew Slater and others), all of which are designed to help people set up their own financial institutions</li><li>Alternative currencies: There’s a reason why the broader public are suddenly interested in <a href="http://suitpossum.blogspot.co.uk/2013/04/how-to-explain-bitcoin-to-your.html">understanding Bitcoin</a>. It’s a currency that people have produced themselves. As a member of the Bitcoin community, I am much more aware of my role in upholding – or producing – the system, than I am when using normal money, which I had no conscious role in producing.&nbsp;The scope to <a href="http://aeon.co/magazine/living-together/so-you-want-to-invent-your-own-currency/">invent your own currency</a> goes far beyond crypto-currencies though: local currencies, time-banks, and mutual credit systems are emerging all over</li><li>The&nbsp;<a href="http://openbankproject.com/en/">Open Bank Project</a>&nbsp;is trying to open up banks to third party apps that would allow a depositor to have much greater customisability of their bank account. It's not aimed at bypassing banks in the way that P2P is, but it's seeking to create an environment where an ecosystem of alternative systems can plug into the underlying infrastructure provided by banks</li></ol></div><div style="text-align: justify;"><br /><br /></div><div style="text-align: justify;"><div style="text-align: center;"><b>Pillar 2: Widespread distribution</b></div></div><div><div style="text-align: justify;">Financial intermediaries like banks and funds serve as powerful gatekeepers to access to financing. To some extent this is a valid role - much like a publisher or music label will attempt to only publish books or music that they believe are high quality enough - but on the other hand, this leads to excessive power vested in the intermediaries, and systematic bias in what gets to survive. When combined with a lack of democratic accountability on the part of the intermediaries, you can have whole societies held hostage to the (arbitrary) whims, prejudices and interests of such intermediaries. Expanding access to financial services is thus a big front in the battle for financial democratisation. In addition to more traditional means to building <a href="https://en.wikipedia.org/wiki/Financial_inclusion">financial inclusion</a> - such as credit unions and microfinance - here are two areas to look at:</div><br /><ul style="text-align: left;"><li style="text-align: justify;"><a href="https://en.wikipedia.org/wiki/Crowdfunding">Crowdfunding</a>: In the dominant financial system, you have to suck up to a single set of gatekeepers to get financing, hoping they won’t exclude you. Crowdfunding though, has expanded access to receiving financial services to a whole host of people who previously wouldn’t have access, such as artists, small-scale filmmakers, activists, and entrepreneurs with no track record. Crowdfunding can serve as a micro redistribution system in society, offering people a direct way to transfer wealth to areas that traditional welfare systems might neglect</li><li style="text-align: justify;"><a href="https://en.wikipedia.org/wiki/Mobile_banking">Mobile banking</a>: This is a big area, with important implications for international development and <a href="https://en.wikipedia.org/wiki/Information_and_communication_technologies_for_development">ICT4D</a>. Check out innovations like <a href="https://en.wikipedia.org/wiki/M-Pesa">M-Pesa</a> in Kenya, a technology to use mobile phones as proto-bank accounts. This in itself doesn’t necessarily guarantee inclusion, but it expands potential access to the system to people that most banks ignore</li></ul></div><div style="text-align: justify;"><br /><br /></div><div style="text-align: justify;"><div style="text-align: center;"><b>Pillar 3: The ability to monitor</b></div></div><div style="text-align: justify;">Do you know where the money in the big banks goes? No, of course not. They don’t publish it, under the guise of commercial secrecy and confidentiality. It’s like they want to have their cake and eat it: “We’ll act as intermediaries on your behalf, but don’t ever ask for any accountability”. And what about the money in your pension fund? Also very little accountability. The intermediary system is incredibly opaque, but attempts to make it more transparent are emerging. Here are some examples:<br /><br /><ul><li><a href="http://www.triodos.co.uk/en/about-triodos/what-we-do/who-we-lend-to/">Triodos Bank</a> and <a href="http://www.charitybank.org/charity-loans">Charity Bank</a> are examples of banks that publish exactly what projects they lend to. This gives you the ability to hold them to account in a way that no other bank will allow you to do</li><li>Corporations are vehicles for extracting value out of assets and then distributing that value via financial instruments to shareholders and creditors. Corporate structures though, including those used by banks themselves, have reached a level of complexity approaching pure obsfucation. There can be no democratic accountability when you can’t even see who owns what, and how the money flows. Groups like <a href="http://opencorporates.com/viz/financial/index.html">OpenCorporates</a>&nbsp;and&nbsp;<a href="http://openoil.net/">Open Oil</a>&nbsp;though, are offering new <a href="https://en.wikipedia.org/wiki/Open_data">open data</a> tools to shine a light on the shadowy world of tax&nbsp;havens, ownership structures and contracts</li><li>Embedded in peer-to-peer models is a new model of accountability too. When people are treated as mere account numbers with credit scores by banks, the people in return feel little accountability towards the banks. On the other hand, if an individual has directly placed trust in me, I feel much more compelled to respect that</li></ul></div><div style="text-align: justify;"><div style="text-align: justify;"><br /><br /></div></div><div style="text-align: justify;"><div style="text-align: center;"><b>Pillar 4: An ethos of&nbsp;</b><b>non-prescriptive&nbsp;</b><b>DIY</b><b>&nbsp;</b><b>collaboration</b></div></div><div style="orphans: auto; text-align: left; text-indent: 0px; widows: auto;"><div style="text-align: justify;"><span style="text-align: justify;">At the heart of open source movements is a deep DIY ethos. This is in part about the sheer joy of producing things, but also about asserting individual power over institutionalised arrangements and pre-established officialdom. Alongside this, and deeply tied to the DIY ethos, is the search to remove individual alienation: <i>You are not a cog in a wheel, producing stuff you don't have a stake in, in order to consume stuff that you don't know the origins of.</i> Unalienated labour includes the right to produce where you feel most capable or excited.&nbsp;</span><br /><span style="text-align: justify;"><br /></span><span style="text-align: justify;">T</span>his ethos of individual responsibility and creativity stands in contrast to the traditional passive frame of finance that is frequently found on both the Right and Left of the political spectrum. Indeed, the debates around 'socially useful finance' are seldom about reducing the alienation of people from their financial lives. They're mostly about turning the existing financial sector into a slightly more benign dictatorship. The essence of DIY though, is to band together, not via the enforced hierarchy of the corporation or bureaucracy, but as&nbsp;part of a likeminded community of individuals creatively offering services to each other. So let's take a look at a few examples of this</div><span style="text-align: justify;"></span><br /><div style="text-align: justify;"><ol><span style="text-align: justify;"><li>BrewDog's '<a href="http://www.brewdog.com/equityforpunks">Equity for Punks</a>' share offering is probably only going to attract beer-lovers, but that's the point - you get together as a group who has a mutual appreciation for a project, and you finance it, and then when you're drinking the beer you'll know you helped make it happen in a small way&nbsp;</li><li><a href="http://communityshares.org.uk/">Community shares</a> offer local groups the ability to finance projects that are meaningful to them in a local area. Here's one for a <a href="http://www.baywind.co.uk/baywind_home.asp">solar co-operative</a>, a <a href="http://bcs.hopevalleyderbyshire.co.uk/The_Share_Offer.html">pub</a>, and a <a href="http://www.bristolferry.com/share_holders.php">ferry boat service</a> in Bristol</li><li>We've already discussed how crowdfunding platforms open access to finance to people excluded from it, but they do this by offering would-be crowdfunders the chance to support things that excite them. I don't have much cash, so I'm not in a position to actively finance people, but in my <a href="http://bit.ly/1dJQBCa">Indiegogo profile</a> you can see I make an effort helping to publicise campaigns that I want to receive financing</li></span></ol></div></div><div style="orphans: auto; text-align: left; text-indent: 0px; widows: auto;"><div style="text-align: justify;"><br /></div></div><div style="orphans: auto; text-align: left; text-indent: 0px; widows: auto;"><div style="text-align: left;"><br /></div></div><div style="text-align: justify;"><div><div style="text-align: center;"><b>Pillar 5: The right to fork</b><br /><b><br /></b></div></div><div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="http://fc05.deviantart.net/fs70/i/2011/165/1/8/1308079022_dissent_by_libertymaniacs-d3iwlff.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://fc05.deviantart.net/fs70/i/2011/165/1/8/1308079022_dissent_by_libertymaniacs-d3iwlff.png" height="400" width="252" /></a></div><br />The right to dissent is a crucial component of a democratic society. But for dissent to be effective, it has to be informed and constructive, rather than reactive and regressive. There is much dissent towards the current financial system, but while people are free to voice their displeasure, they find it very difficult to actually act on their displeasure. We may loathe the smug banking oligopoly, but we're frequently compelled to use them.<br /><br />Furthermore, much dissent doesn't have a clear vision of what alternative is sought. This is partially due to the fact that access to financial 'source code' is so limited. It's hard to articulate ideas about what's wrong when one cannot articulate how the current system operates. Most financial knowledge is held in proprietary formulations and obscure jargon-laden language within the financial sector, and this needs to change. It's for this reason that I'm building the <a href="http://suitpossum.blogspot.co.uk/p/chartered-financial-activism.html">London School of Financial Activism</a>, so ordinary people can explore the layers of financial code, from the deepest layer - the <a href="http://www.aeonmagazine.com/living-together/so-you-want-to-invent-your-own-currency/">money itself</a>&nbsp;- and then on to the institutions, instruments and networks that move it around.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Beyond access to this source code though, we need the ability to act on it. A core principle of OpenSource movements is the <i><a href="https://en.wikipedia.org/wiki/Fork_(software_development)">Right to Fork</a></i>. This is the ability to take preexisting code, and to modify it or use it as the basis for your own. The&nbsp;Right to Fork is both a check on power, but also a force for diversity and creativity.<br /><br />In the mainstream financial system though, there are extensive blocks on the right to fork, many of them actively enforced by financial regulators. They won't allow new banks to start, and apply inappropriate regulation to small, new financial technologies. The battle for the right to fork therefore, is one that has to also be fought at the regulatory level. That's why we need initiatives like the <a href="http://thefinancelab.org/disruptive-finance-polcies/">Disruptive Finance Policy</a> program.<br /><br />The Right to Fork needs to be instilled into the design of any alternatives to mainstream finance too though. I don't want to replace a world where I'm forced to use national fiat currencies with one in which I'm forced to use Bitcoin. The point is to create meaningful options for people. (To the credit of the original designers of Bitcoin, the right to fork has indeed been built in, and there has been significant use of&nbsp;the original&nbsp;Bitcoin sourcecode to create <a href="http://www.coinchoose.com/">other cryptocurrencies</a>, albeit&nbsp;it takes more to create a currency than merely deploying new code).<br /><br /></div><div style="text-align: justify;"><br /><div style="text-align: center;"><b>Ahoy! We set sail for the Open seas</b></div><div style="text-align: center;"><b><br /></b></div><div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://fc00.deviantart.net/fs23/f/2008/014/2/6/Flying_Whales_by_vhm_alex.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://fc00.deviantart.net/fs23/f/2008/014/2/6/Flying_Whales_by_vhm_alex.jpg" height="400" width="266" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">EXPLORE THE DEEP</td></tr></tbody></table>We may be in the early phase of a slow-moving revolution, which will only be perceptible in hindsight. As projects within these five pillars emerge, the infrastructure, norms and cultural acceptance for more connected, creative, open financial system may begin to emerge and coalesce into reality.<br /><br />I hope this article has been of use to you, whether you're looking to design actual open source finance platforms, programs and free software, or pioneer a new element of open access and open data, or whether you're just keen to help beta-test new ideas as they get released. The financial sector is a big heavy conglomerate that is a perfect challenge for the adventurous pirate-meets-hacker-meets-activist-meets-entrepreneur. Please do tell me about anything you're up to, and, in the spirit of Open Source, please do leave suggested amendments to this article in the comments section. I'll try patch them into the next version of this.<br /><br /><br /><hr style="background-color: white; color: #0a0000; font-family: Arimo; font-size: 14px; line-height: 19.6000003814697px; text-align: left;" /><h3 style="background-color: white; color: #0a0000; font-family: Arimo; margin: 0px; position: relative; text-align: left;"></h3><h3 style="background-color: white; color: #0a0000; font-family: Arimo; margin: 0px; position: relative; text-align: left;">Some things to do if you enjoyed this article...</h3><div style="background-color: white; color: #0a0000; font-family: Arimo; font-size: 14px; line-height: 19.6000003814697px; text-align: left;">I sometimes spend weeks writing these articles, and don't generally get paid to do it, so if you enjoyed please consider doing one or two of the following</div><ol style="background-color: white; color: #0a0000; font-family: Arimo; font-size: 14px; line-height: 19.6000003814697px; text-align: left;"><li style="margin: 0px 0px 0.25em; padding: 0px;">Support by&nbsp;<a href="http://suitpossum.blogspot.co.uk/p/support.html" style="color: #ff9900; text-decoration: none;">buying me a virtual beer</a></li><li style="margin: 0px 0px 0.25em; padding: 0px;">Submit to&nbsp;<a href="http://www.reddit.com/" style="color: #ff9900; text-decoration: none;">Reddit</a></li><li style="margin: 0px 0px 0.25em; padding: 0px;">Link to the article from your own blog so your readers can see it too</li></ol></div></div></div></div></div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/W3PhvaZ8P9s" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com0http://suitpossum.blogspot.com/2013/11/building-creative-commons-five-pillars.htmltag:blogger.com,1999:blog-6454624189383327908.post-14227710309465885322013-10-06T16:03:00.001+01:002014-12-05T17:17:22.887+00:00ATM Hacking and the Art of Hole-in-the-Wall Detournment<div dir="ltr" style="text-align: left;" trbidi="on"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://www.virginmedia.com/images/atm-74183339.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="http://www.virginmedia.com/images/atm-74183339.jpg" height="312" width="500" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><br /></td></tr></tbody></table><div style="text-align: justify;">The Automatic Teller Machine is one the primary interfaces we have with the banking system. It's a machine of convenience, replicating what a human bank teller used to do. They're often placed next to physical bank branches, reinforcing the widespread notion that the money coming out of the wall somehow came from 'inside' the bank. Given that the majority of our money is in fact electronic, and stored in a bank's datacentre-based IT system, nowhere remotely close to the ATM, this is something of an illusion. Indeed, the ATM &nbsp;can echo and reinforce much of the disconnection implicit in the broader banking system.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">That said, the fact that people are constantly using ATMs makes them great venues for symbolic pranking. Maybe one could call it, like the situationists did,&nbsp;<i><a href="https://en.wikipedia.org/wiki/D%C3%A9tournement">detournment</a></i>&nbsp;<i>- </i>the art of throwing people's minds into an unexpected detour whilst they trudge through otherwise unthinking everyday practice. The hope of such a situationist prankster is to make someone reflect about the deeper meaning of economic life. Alternatively, it may be simply to have fun. What follows are some ideas and examples from the cutting edge of ATM artistry and activism (horray!).</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><b>Difficulty level 1: ATM as billboard</b></div><div style="text-align: left;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="http://sfist.com/attachments/SFist_Brock/boa_prank_5.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://sfist.com/attachments/SFist_Brock/boa_prank_5.jpg" height="320" width="320" /></a></div><div style="text-align: justify;">Plastering an ATM with stickers is a straightforward tactic for the social justice prankster. Here's an example from Rainforest Action Network activists who&nbsp;<a href="http://sfist.com/2012/01/13/activists_turn_bank_of_america_atms.php?gallery0Pic=2#photo-2">designed a sticker</a> replicating the Bank of America ATM screen to protest <a href="http://ran.org/bankofcoal">BoAs funding of coal power</a>. Options offered include 'Bankroll Climate Change' and 'Fund Executive Bonuses', forcing the user to reflect on the implications of the bank's continued support for a high carbon future (albeit it's possible that it also drove them into a rage at their inability to use the machine).</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /><br /><br /><div><b>Difficulty level 2: ATM as street art</b></div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="http://jasoneppink.com/wp-content/gallery/magic-spigots/atm_1.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em; text-align: justify;"><img border="0" src="http://jasoneppink.com/wp-content/gallery/magic-spigots/atm_1.jpg" height="240" width="320" /></a></div><div>ATMs are economic installations, so why not use them as sites for further installation artworks? Here's one example from Jason Eppinks: He designed a&nbsp;<a href="http://jasoneppink.com/magic-spigots/">magic spigot</a>&nbsp;that gushes forth with whatever is inside the thing the spigot is attached to. In this case it gushes forth dollar bills (which admittedly are attached to a string).</div><div><br /></div><div><br /></div><div><br /></div><div><br /></div><div><br /></div><div><br /></div></div><div style="text-align: justify;"><div><b>Difficulty level 3: ATM for homemade money</b><br /><br /><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="http://www.boijmans.nl/images/events/slides/560/BANK_P15.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://www.boijmans.nl/images/events/slides/560/BANK_P15.jpg" height="218" width="320" /></a></div>If you make your own DIY money, you need your own DIY ATM. The Dutch money-artist <a href="http://blog.artasmoney.com/blog/">Dadara</a>&nbsp;uses&nbsp;<a href="http://blog.artasmoney.com/bank/exchanghibition-bank-at-glastonbury/">Exchanghibition Bank</a>, an outlet to dispense his hand-designed bills to members of the public. Ok, it's not quite an ATM, but it's only a matter of time before he automates it. (Dadara also lent his designs for a limited edition version of my book - check <a href="http://suitpossum.blogspot.co.uk/2013/08/lsfa-crowdfunding-update-meet-hedge.html">here</a>)<br /><b><br /></b><b><br /></b><b><br /></b><br /><b>Difficulty level 4: ATM as musical instrument</b><br /><div class="separator" style="clear: both; text-align: center;"><a href="http://graphics8.nytimes.com/images/2011/06/03/arts/veniceatmcap/veniceatmcap-blog480.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="http://graphics8.nytimes.com/images/2011/06/03/arts/veniceatmcap/veniceatmcap-blog480.jpg" height="213" width="320" /></a></div>To do this you just get an ATM and <a href="http://makezine.com/2012/09/13/pipe-organ-and-atm-mashup/">attach it to a medium-sized pipe organ</a>, or perhaps a synthesiser. I'm not entirely sure what the point is, but perhaps it's to give a person a audible sense of the consequences of their banking decisions. If you'd like to hear it in action, check out the video <a href="http://www.youtube.com/watch?v=BeCzQNfJLEw&amp;feature=player_embedded">here</a>.<br /><b><br /></b><b><br /></b><b><br /></b><b><br /></b><br /><b>Difficulty level 5: ATM as games arcade</b></div><div>Now we get a little bit more complex. Certain ATM designs have technical glitches that enable you to override their normal functionality. With a bit of practice you can play Angry Birds on your local Russian ATM whilst listening to Zero Day by the long-forgotten 90s hard rock band without a Wikipedia page, <i>Nevada Beach</i>. For more info on this, see <a href="http://www.scmagazine.com.au/News/334005,hacked-atm-plays-angry-birds.aspx">here</a>.<br /><br /></div><div><iframe allowfullscreen="" frameborder="0" height="280" src="http://www.youtube.com/embed/LHXP-1WpOIs" width="500"></iframe></div><div><br /></div><b><br /></b><b>Difficulty level 6: Build your own ATM</b><br />My greatest ever Lego creation was a Landrover I designed from scratch, equipped with a winch, engine and moving propshaft. These guys though, have used Lego to make an ATM, a technically challenging task even for Lego obsessives. The beautiful thing about this is that by it's very nature Lego is deconstructable: thus, unlike your traditional ATM which exudes a lack of trust from under its armoured exterior, this machine relies on trust, and believes in the best in people. Only a complete arsehole would try to break up another's Lego creation.<br /><br /></div><iframe allowfullscreen="" frameborder="0" height="375" src="//www.youtube.com/embed/L0Z-ym0k89Q" width="500"></iframe> <br /><div style="text-align: justify;"><br /><br /></div><div style="text-align: justify;"><b>Difficulty level 7: The ATM as Robin Hood</b></div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="http://hackedgadgets.com/wp-content/uploads/2010/08/barnaby-jack-hack-demonstrated-at-black-hat-2010-conference.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://hackedgadgets.com/wp-content/uploads/2010/08/barnaby-jack-hack-demonstrated-at-black-hat-2010-conference.jpg" height="225" width="400" /></a></div>At the 2010 Black Hat hacker conference the late great&nbsp;<a href="https://en.wikipedia.org/wiki/Barnaby_Jack">Barnaby Jack</a>&nbsp;demonstrated how to <a href="http://www.youtube.com/watch?v=Ss_RWctTARU">'jackspot' an ATM</a>, using some technical wizardry to get it to spit out money in a manner reminiscent to the Doctor Who episode <a href="http://www.youtube.com/watch?v=UBO3Kvg7FJw">'The Runaway Bride'</a>. This is of course illegal, so if you're going to do this, please make sure the proceeds go to a worthwhile cause.<br /><br /><b>The Next Step: Alternative Currency ATMs</b><br />The potential to subvert ATMs goes beyond immediate jamming of conventional finance. There is also the opportunity to promote alternative versions of finance. For example, <a href="https://bitcoinatm.com/">Bitcoin ATMs</a> have already been designed, and I've previously suggested that I'd like to see <a href="http://brixtonpound.org/2013/yourpound-meet-the-author-brett-scott/">Brixton Pound ATMs</a>. I'm going to start working on some schematics for that (and download some DIY engineering courses at the same time). If you have any ideas for other cool ATM artworks, pranks, and (legal) hacks, please do share.<br /><br /><br /><hr style="background-color: white; color: #0a0000; font-family: Arimo; font-size: 14px; line-height: 19.6000003814697px; text-align: left;" /><h3 style="background-color: white; color: #0a0000; font-family: Arimo; margin: 0px; position: relative; text-align: left;"></h3><h3 style="background-color: white; color: #0a0000; font-family: Arimo; margin: 0px; position: relative; text-align: left;">Some things to do if you enjoyed this article...</h3><div style="background-color: white; color: #0a0000; font-family: Arimo; font-size: 14px; line-height: 19.6000003814697px; text-align: left;">I sometimes spend weeks writing these articles, and don't generally get paid to do it, so if you enjoyed please consider doing one or two of the following</div><ol style="background-color: white; color: #0a0000; font-family: Arimo; font-size: 14px; line-height: 19.6000003814697px; text-align: left;"><li style="margin: 0px 0px 0.25em; padding: 0px;">Support by&nbsp;<a href="http://suitpossum.blogspot.co.uk/p/support.html" style="color: #ff9900; text-decoration: none;">buying me a virtual beer</a></li><li style="margin: 0px 0px 0.25em; padding: 0px;">Submit to&nbsp;<a href="http://www.reddit.com/" style="color: #ff9900; text-decoration: none;">Reddit</a></li><li style="margin: 0px 0px 0.25em; padding: 0px;">Link to the article from your own blog so your readers can see it too</li></ol></div></div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/T6cglgnxPyE" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com2http://suitpossum.blogspot.com/2013/10/atm-hacking-and-art-of-hole-in-wall.htmltag:blogger.com,1999:blog-6454624189383327908.post-45120335935867253732013-08-31T18:06:00.002+01:002013-08-31T18:12:54.703+01:00Adventures in Alternative Currency<div dir="ltr" style="text-align: left;" trbidi="on"><div dir="ltr" style="text-align: left;" trbidi="on"><div dir="ltr" style="text-align: left;" trbidi="on"><div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="https://static.squarespace.com/static/51b3dc8ee4b051b96ceb10de/51ce6099e4b0d911b4489b79/51ce618ee4b0d911b4498177/1357403623407/1000w/jlbill1.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="213" src="https://static.squarespace.com/static/51b3dc8ee4b051b96ceb10de/51ce6099e4b0d911b4489b79/51ce618ee4b0d911b4498177/1357403623407/1000w/jlbill1.jpeg" width="500" /></a></div><br /><div style="text-align: justify;">I published an epic <a href="http://www.aeonmagazine.com/living-together/so-you-want-to-invent-your-own-currency/">4200 word article on alternative currency</a> in Aeon magazine. Take a read if you're having a lazy weekend afternoon and wish to casually reflect on the nature of economic reality. I believe that coming to basic grips with money itself is a good foundation for making further explorations into the financial system, and economic systems more generally. As I say in the article:</div><blockquote class="tr_bq" style="text-align: justify;">"The financial system exists, above all, to mediate flows of money, not to question what money is. Investment banks create financial instruments that steer money from one place to another, with built-in sub-conduits to siphon it back... To draw an analogy with computer coding, we might say that financial instruments are analogous to ‘high-level’ programming languages such as Java or Ruby: they let you string commands together in order to perform certain actions. <i>You want to get resources from A to B over time? Well, we can program a financial instrument to do that for you...&nbsp;</i>By contrast, money itself is more like a low-level programming language, very hard to see or to understand but closer to gritty reality. It’s like your computer’s machine code, interfacing with the hardware: even the experts take it for granted.</blockquote>The piece has been pretty well received. I'll leave you with some Twitter recommendations, to convince you to read it. The first comes from Izabella Kaminska of FT Alphaville</div><blockquote class="twitter-tweet">Nice and very accessible piece by <a href="https://twitter.com/Suitpossum">@Suitpossum</a> on the nature of our modern monetary universe... <a href="http://t.co/15Gc2oGc2l">http://t.co/15Gc2oGc2l</a><br />— Izabella Kaminska (@izakaminska) <a href="https://twitter.com/izakaminska/statuses/373371980679901184">August 30, 2013</a></blockquote><script async="" charset="utf-8" src="//platform.twitter.com/widgets.js"></script></div><blockquote class="twitter-tweet">So you want to invent your own currency <a href="http://t.co/wiaUyB0xTd">http://t.co/wiaUyB0xTd</a> truly amazing post by <a href="https://twitter.com/Suitpossum">@Suitpossum</a> that helps you understand <a href="https://twitter.com/search?q=%23money&amp;src=hash">#money</a><br />— Simone Cicero (@meedabyte) <a href="https://twitter.com/meedabyte/statuses/373432193890398208">August 30, 2013</a></blockquote><script async="" charset="utf-8" src="//platform.twitter.com/widgets.js"></script><blockquote class="twitter-tweet">Mind-blowing article on the future of currencies - by Brett Scott <a href="http://t.co/gso1hmObvG">http://t.co/gso1hmObvG</a><br />— Matteo Bianchini (@matteobianchini) <a href="https://twitter.com/matteobianchini/statuses/373463259757969408">August 30, 2013</a></blockquote><script async="" charset="utf-8" src="//platform.twitter.com/widgets.js"></script></div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/VtFAwroivEg" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com0http://suitpossum.blogspot.com/2013/08/adventures-in-alternative-currency.htmltag:blogger.com,1999:blog-6454624189383327908.post-22163928292318924182013-08-02T09:02:00.000+01:002013-08-02T09:02:14.883+01:00LSFA crowdfunding update: Meet the Hedge Fund Gamblers & The Three Hackers<div dir="ltr" style="text-align: left;" trbidi="on"><div style="text-align: left;"></div><div style="text-align: justify;"><table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody><tr><td style="text-align: center;"><a href="http://2.bp.blogspot.com/-Z2465usc8Rc/UftnAeSPxvI/AAAAAAAAB5w/AcQNy093Fuk/s1600/Heretics+guide+Brett+Scott.jpg" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="320" src="http://2.bp.blogspot.com/-Z2465usc8Rc/UftnAeSPxvI/AAAAAAAAB5w/AcQNy093Fuk/s320/Heretics+guide+Brett+Scott.jpg" width="240" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">PICK A CARD</td></tr></tbody></table>A few months ago I ran a campaign to seedfund a&nbsp;<a href="http://www.indiegogo.com/projects/the-london-school-of-financial-activism/x/2406554">London School of Financial Activism</a> on the crowdfunding site Indiegogo. That was a great success (here's a post I wrote about some <a href="http://suitpossum.blogspot.co.uk/2013/03/kickstarting-gogofactor-top-tips-i.html">crowdfunding tips</a> I learned from the campaign). Then my <a href="http://www.plutobooks.com/display.asp?K=9780745333502">book</a> got released, which has since swallowed up much of my time, but now I've hired some <a href="http://suitpossum.blogspot.co.uk/2013/06/seeking-futureofmoney-interns-for-help.html">interns</a>&nbsp;(that I'm paying in alternative currencies like bitcoin, barter and Brixton Pounds), so I've now got more space to refocus back on developing the School.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">I've met some awesome people over the last few months, exchanging ideas over Skype with campaigners, entrepreneurs and academics in Oz, Hong Kong, China, USA, Germany, South Africa and various other places, all informing my designs for finance campaigning courses.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">In the mean time though, I wanted to share some photos of the crowdfunding rewards that came with the Indiegogo campaign, and one short video which shows one of the reward's magical secret. (More photos can be found on The Heretic's Guide <a href="https://www.facebook.com/media/set/?set=a.161589590700946.1073741830.138305263029379&amp;type=1">Facebook Album</a>)</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><div style="text-align: center;"><b>The Guerilla Brokers, Junior Traders and Hardass Cityboys</b></div><div style="text-align: center;"><b><br /></b></div></div><div style="text-align: justify;"><table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody><tr><td style="text-align: center;"><a href="http://4.bp.blogspot.com/-jtK9QevftbQ/UfpsjraxoFI/AAAAAAAAB5g/hXwwpCCyytc/s1600/IMG_0094.jpg" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="320" src="http://4.bp.blogspot.com/-jtK9QevftbQ/UfpsjraxoFI/AAAAAAAAB5g/hXwwpCCyytc/s320/IMG_0094.jpg" width="240" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">HERETIC IN SOUTH AFRICA</td></tr></tbody></table>First on the list were 18 sets of Chartered Financial Activist stickers that I sent out to the Guerilla Brokers who contributed under £10. If you see these plastered on the toilet wall of your local City pub, you know where they came from.<br /><br />Then I sent 100 signed paperback copies of my book for those who opted to be Junior Traders, and 25 hardbacks for the Hardass Cityboys series (each representing one of the wards of the City of London).&nbsp;These books ended up all over the world, admittedly costing me a small fortune in postage fees (note to self for next crowdfunding campaign - it matters where you're posting to). Here's a photo of a mate in South Africa with his copy (Thanks Tim!)</div><div style="text-align: justify;"><br /><br /><br /><br /><br /></div><div style="text-align: justify;"><div style="text-align: center;"><b>The Hedge Fund Gamblers</b></div><div style="text-align: center;"><b><br /></b></div></div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="http://4.bp.blogspot.com/-KexjWCP7ucA/Ufpn_lt1qRI/AAAAAAAAB5E/P70uljsEuhA/s1600/Hedge+Fund+Gamblers+series.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="300" src="http://4.bp.blogspot.com/-KexjWCP7ucA/Ufpn_lt1qRI/AAAAAAAAB5E/P70uljsEuhA/s400/Hedge+Fund+Gamblers+series.jpg" width="400" /></a></div>Now onto the higher end rewards. Five generous individuals opted to be Hedge Fund Gamblers and as part of their package they received custom poker cards from Steve Shedden of <a href="http://www.ivorygraphics.co.uk/playing-cards.asp">Ivory Graphics</a>. These cards are fit for James Bond, with non-stick coating to ensure super-fast shuffling. I've agreed to go play poker with two of the recipients of this reward, so I imagine I'm going to lose more cash on this than I made from the crowdfunding.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /><div style="text-align: center;"><b>The Three Hackers</b></div><div style="text-align: center;"><b><br /></b></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://2.bp.blogspot.com/-nlGUGHYeHRE/Ufpn_hyo9QI/AAAAAAAAB44/8vWgSjj1xwA/s1600/The+Three+Hackers.jpg" imageanchor="1" style="font-size: 13px; margin-left: auto; margin-right: auto; text-align: center;"><img border="0" height="300" src="http://2.bp.blogspot.com/-nlGUGHYeHRE/Ufpn_hyo9QI/AAAAAAAAB44/8vWgSjj1xwA/s400/The+Three+Hackers.jpg" width="400" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">DADARA COVER, STIDY COVER, &amp; THERMOCHROMIC COVER</td></tr></tbody></table></div><div style="text-align: justify;"><br />The top rewards were 'The Three Hackers' , three hardcopies with bespoke handmade covers that went to my three top contributors. Locating the right people to design the limited edition covers took some time, but in the end I ended up with fantastic designs from:<br /><ol><li>The Dutch artist Dadara, who is featured in the book for his fantastic <a href="http://blog.artasmoney.com/blog/">Art as Money</a> designs. He very kindly lent me two of his black and white money drawings</li><li>The brilliant South African political cartoonist <a href="http://africartoons.com/cartoonist/stidy">Stidy</a>, who also happens to be my uncle. He drew a classic scene out of Moby Dick, set against the backdrop of the City of London</li><li>My amazingly talented friend <a href="http://jessibaker.co.uk/">Jessi Baker</a> (designer, coder,&nbsp;augmented reality guru,&nbsp;onsultant to peeps like Will.I.Am), and the&nbsp;textile alchemist&nbsp;<a href="http://www.texprint.org.uk/index.php/feature/lauren-bowker-textiles-art-science/">Lauren Bowker</a>,&nbsp;who designed a cover which literally changes colour as a person holds it (see video below for demonstration)</li></ol><br /><table cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://3.bp.blogspot.com/-0KDYdMeNBxE/UfpsB3p5x8I/AAAAAAAAB5Y/ua2y8rSh2bA/s1600/Chris+at+work.jpg" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="300" src="http://3.bp.blogspot.com/-0KDYdMeNBxE/UfpsB3p5x8I/AAAAAAAAB5Y/ua2y8rSh2bA/s400/Chris+at+work.jpg" width="400" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><div class="separator" style="clear: both; text-align: center;"><br /></div>MY FRIEND CHRIS WORKS HIS PRODUCTION MAGIC</td></tr></tbody></table><br /></div><table cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://4.bp.blogspot.com/-hJ5yt0ZADnU/Ufpn_mDt-jI/AAAAAAAAB5A/3mnQZtT7w_A/s1600/The+Hacker+No+3.jpg" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="300" src="http://4.bp.blogspot.com/-hJ5yt0ZADnU/Ufpn_mDt-jI/AAAAAAAAB5A/3mnQZtT7w_A/s400/The+Hacker+No+3.jpg" width="400" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">A LOOK INSIDE THE THIRD HACKER</td></tr></tbody></table><br /><br /><b>AND NOW, the Hairdryer in Action</b><br />Ok, to fully appreciate Jessi and Lauren's cover you've got to watch the end of this video. Enjoy!<br /><br /><iframe allowfullscreen="" frameborder="0" height="280" src="//www.youtube.com/embed/wuJ2hYCuje8" width="500"></iframe><br /><br /></div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/dOqT4qdWZx4" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com0http://suitpossum.blogspot.com/2013/08/lsfa-crowdfunding-update-meet-hedge.htmltag:blogger.com,1999:blog-6454624189383327908.post-45285736041014849642013-06-26T16:51:00.000+01:002013-06-26T16:52:55.214+01:00Seeking #futureofmoney interns for help with gonzo finance: Will pay with alternative currency<div dir="ltr" style="text-align: left;" trbidi="on"><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="http://fc01.deviantart.net/fs70/i/2010/020/6/4/Icon_Spreadsheet_by_mixmaster163.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="276" src="http://fc01.deviantart.net/fs70/i/2010/020/6/4/Icon_Spreadsheet_by_mixmaster163.png" width="460" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">WANTED: UNDERDOGS WITH ATTITUDE</td></tr></tbody></table><div style="text-align: justify;">I've got some alternative currency, and I'm willing to give it to interns who can do part-time work for me to help me with publicity for my <a href="http://suitpossum.blogspot.co.uk/p/the-heretics-guide.html">new book on global finance</a>. I'm going to be resuming work on the <a href="http://www.indiegogo.com/projects/the-london-school-of-financial-activism/x/2406554">London School of Financial Activism</a> soon too, so there are possibilities to get involved there as well.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><b>Up for grabs: Alternative currency for alternative work</b></div><span style="text-align: justify;">I'd like open-minded people who are keen to learn more about alternative finance. I'll be straight up with you though: Some of it is total drudge work, like trawling through a list of 100 institutions and finding email addresses for them. I have a series of discreet tasks y</span>ou can volunteer for in exchange for<span style="text-align: justify;">&nbsp;a bounty in certain </span>esoteric currencies I've got from selling my book. Choices include:<br /><ol style="text-align: left;"><li style="text-align: justify;"><i>Bitcoin:&nbsp;</i>Not only is this an interesting experience to use in itself, but you get to tell people at parties that you're paid in cryptocurrency</li><li style="text-align: justify;"><i>Brixton Pounds:&nbsp;</i>I'd like to get at least one South London dweller to do a couple hours for Brixton Pounds</li><li style="text-align: justify;"><i>Barter: </i>This option is available for people who'd like a copy of my book in exchange for an hour or two of work</li></ol><div style="text-align: justify;"><b><br /></b></div><div style="text-align: justify;"><b>How to apply</b></div><div style="text-align: justify;">My email is in the right-hand column, so ping me message if you're interested. I'm favourable towards slightly outsider, underdog, anarchic types. I'm not so interested in how clever you are, or what extra-curricular activities you did at school. Send me a brief description of yourself, and a (non-finance) Youtube video you particularly like (could be anything), or write a haiku about money. I can then send a list of things I'm looking to get done, and we can start a conversation.</div></div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/p2RttuqzZ7Q" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com0http://suitpossum.blogspot.com/2013/06/seeking-futureofmoney-interns-for-help.htmltag:blogger.com,1999:blog-6454624189383327908.post-52666417240735017682013-05-19T22:53:00.000+01:002016-12-22T18:19:52.169+00:00So you want to be a DIY gonzo financial activist? The Heretic's Guide has arrived!<div dir="ltr" style="text-align: left;" trbidi="on"><div class="separator" style="clear: both; text-align: center;"><a href="http://3.bp.blogspot.com/-gWkHT9fDRKI/UZkxuzyiVYI/AAAAAAAABxk/R31j8PS6gCg/s1600/HereticsGuide+BrettScott.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em; text-align: justify;"><img border="0" height="265" src="https://3.bp.blogspot.com/-gWkHT9fDRKI/UZkxuzyiVYI/AAAAAAAABxk/R31j8PS6gCg/s400/HereticsGuide+BrettScott.jpg" width="400" /></a></div><div style="text-align: justify;">My new book, <i>The Heretic's Guide to Global Finance: Hacking the Future of Money,</i>&nbsp;is now officially out, published by the superb Pluto Press. Boom! I've set up a&nbsp;<a href="http://suitpossum.blogspot.co.uk/p/the-heretics-guide.html">dedicated page for it here</a>, and a <a href="https://www.facebook.com/HereticsGuideToGlobalFinance">Facebook page for it here</a>.<br /><br /></div><div style="text-align: justify;"><b>3 THINGS YOU WILL LEARN FROM THIS BOOK</b></div><div style="text-align: justify;">After reading this book, you will be an ass-kicking financial fighting monk on a mission to hack the future of money. The book uses a unique three part structure to achieve this:<br /><i><br /></i><br /><div style="text-align: left;"></div><i>Part 1: Exploring</i><br />This is where you learn the wiring under the bonnet of the global financial system. You'll see the circuitry of investment banks, commercial banks, institutional investors, hedge funds, and private equity funds, and explore investment processes, trading culture, and much much more as well.<br /><br /><div style="text-align: left;"></div><i>Part 2: Jamming: </i>This is the part where we learn how to bend the circuits of global finance. I cover how to destabilise investment cases in damaging projects, how to uncover information in opaque corporate structures, and how to design your own subversive hedge funds of dissent.<br /><br /><div style="text-align: left;"></div><i>Part 3: Building: </i>If you're going to bust dams, then you better build canals too. In part 3 we get creative and look at how to start building alternatives to channel money in positive ways. You'll explore alternative currencies, P2P, co-operative systems and open source finance, and learn what insights Jimi Hendrix offers us about the path forward to a more democratic financial system.</div><ul style="text-align: left;"></ul><div style="text-align: justify;"><br /><br /><br /></div><div style="text-align: justify;"><b>3 THINGS PEOPLE ARE SAYING ABOUT IT</b></div><div style="text-align: justify;">Just is case that doesn't get you excited, take a look at what my three endorsers are saying.<br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://encrypted-tbn3.gstatic.com/images?q=tbn:ANd9GcTr6JRYplgPbPVMu-xTv1OjEoGqXuvQJlEzW8itIoqjL1Eponq0Jg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="200" src="https://encrypted-tbn3.gstatic.com/images?q=tbn:ANd9GcTr6JRYplgPbPVMu-xTv1OjEoGqXuvQJlEzW8itIoqjL1Eponq0Jg" width="200" /></a></div><a href="http://en.wikipedia.org/wiki/Bill_McKibben" style="text-align: left;">Bill McKibben</a><span style="text-align: left;">, the epic, inspiring environmental warrior who started 350.org, says:&nbsp;</span><br /><blockquote class="tr_bq"><span style="text-align: left;"><i>"This is an imaginative, even exuberant exploration of the daunting world of finance - it will unleash a generation of activists, and do a world of good."</i></span></blockquote><br /><br /><br /><div class="separator" style="clear: both; text-align: center;"><a href="http://d.gr-assets.com/authors/1294879177p5/95227.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="200" src="https://d.gr-assets.com/authors/1294879177p5/95227.jpg" width="200" /></a></div><a href="http://en.wikipedia.org/wiki/Ha-Joon_Chang" style="text-align: left;">Ha-Joon Chang</a><span style="text-align: left;">, the irreverent, ass-kicking Cambridge economist who wrote </span><i style="text-align: left;">23 They Don't Tell You About Capitalism</i><span style="text-align: left;">, says:&nbsp;</span><br /><blockquote class="tr_bq"><span style="text-align: left;"><i>"This book provides a unique inside-out look at our financial system, based on the author's unusual personal adventure. It not only provides us with a user-friendly guide to the complex maze of modern finance but also tells us how to utilise and subvert it for social purposes in innovative ways. Smart and street-smart."</i></span></blockquote><br /><div class="separator" style="clear: both; text-align: center;"><a href="http://www.neweconomics.org/page/-/images/staff/Tony_Greenham_150.jpg/@mx_150@zy_150" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="200" src="https://www.neweconomics.org/page/-/images/staff/Tony_Greenham_150.jpg/@mx_150@zy_150" width="200" /></a></div><a href="http://www.neweconomics.org/people/entry/tony-greenham">Tony Greenham</a>, alternative finance guru with the awesome New Economics Foundation, says:<br /><blockquote class="tr_bq"><span style="text-align: left;"><i>“Money is power, but so too is knowledge. Tinkering with regulation will not change the world, but empowered citizens just might. Brett Scott’s entertaining and informative book is brimming with good ideas on how we can engage and change global finance on our own terms.”</i></span></blockquote></div><div style="text-align: justify;"><br /><br /><br /></div><div style="text-align: justify;"><b>3 WAYS YOU CAN HELP ME OUT</b></div><div style="text-align: justify;">Pluto Press is a bold, independent publisher, which firstly means they produce great books, and secondly means they're not a global corporate megalith with a massive marketing budget. Any help that you can give Pluto and myself promoting the book is thus vital and would be much appreciated! Here are three things you can do:</div><ul style="text-align: left;"><li style="text-align: justify;">Please can you help share this on Twitter: Here's a <a href="https://twitter.com/Suitpossum/status/336226333703168000">tweet you can retweet</a> if you're short on time</li><li style="text-align: justify;">Please like the <a href="https://www.facebook.com/HereticsGuideToGlobalFinance">Facebook page</a>, and share it with you friends</li><li style="text-align: justify;">Please email this blog to 1 friend who you think will appreciate it - you can find an email button at the bottom of this post</li></ul><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><b>And if you feel like ordering it ;)</b><br />You can order it directly from the <a href="http://www.plutobooks.com/display.asp?K=9780745333502&amp;">publisher</a>, or from <a href="http://www.amazon.co.uk/gp/product/0745333508/ref=as_li_ss_tl?ie=UTF8&amp;camp=1634&amp;creative=19450&amp;creativeASIN=0745333508&amp;linkCode=as2&amp;tag=suitpossum-21">Amazon</a>, or if you're feeling creative, you can use <a href="http://suitpossum.blogspot.co.uk/p/the-heretics-guide.html">alternative currencies to get a signed copy</a>&nbsp;(see details at bottom of page). Thanks, and I'd love to hear your feedback on the book - my email is in the right hand panel so please do contact me with your thoughts. Cheers!</div></div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/JYPqxuN4HX8" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com0http://suitpossum.blogspot.com/2013/05/so-you-want-to-be-diy-gonzo-financial.htmltag:blogger.com,1999:blog-6454624189383327908.post-53444491596325679952013-04-22T13:23:00.001+01:002016-12-22T18:17:02.058+00:00How to explain Bitcoin to your grandmother<div dir="ltr" style="text-align: left;" trbidi="on"><div class="separator" style="clear: both; text-align: center;"></div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div>As anyone who doesn't have a degree in advanced computer science knows, Bitcoin is conceptually tricky. Thus, when your grandmother is wanting to buy marijuana off the&nbsp;<a href="http://en.wikipedia.org/wiki/Silk_Road_(marketplace)">Silk Road</a>&nbsp;and begins asking you to explain Bitcoin to her, what do you do? Ever since early 2012, when I asked the question '<a href="http://suitpossum.blogspot.co.uk/2012/06/block-chain-of-infinite-mystery-what.html">what the hell is Bitcoin?</a>', I've been trying to&nbsp;find ways to explain it to myself. Initially I used the example of the Borg from Star Trek, but more recently I've come to believe that one key to describing it is to start from normal currency, and to then describe Bitcoin in relation to that, rather than trying to describe it as a standalone phenomenon. I'm no Bitcoin expert, so this is still a work-in-progress (Warning!), but next time granny asks you,&nbsp;here's a rough-and-ready way you might lay down the foundations (I've deliberately included a lot of&nbsp;repetition, because that's important when learning).</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><b>1) Start from physical cash</b></div><div style="text-align: justify;">We all have a basic understanding of physical bank notes. We know that we can store a banknote in our wallet, and then exchange it directly with someone else for goods or services. We can do this because we collectively believe the note to have value, anchored as it is within an immensely powerful cultural system which gives it such value, and further reinforced by our belief in the central banks that issue it, and the governments that accept it for tax.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><b>2) Now contrast physical cash with electronic bank money</b></div><div style="text-align: justify;">Most of our transactions though, are with <i>electronic money</i>. That's the money you see when you log into your online banking account, and that you can use to make electronic payments (if you granny doesn't do internet banking, talk about the numbers on the ATM screen). Where is that electronic money stored? It's not like I have a wallet that has electronic cash in it that I can take out and give to someone. All our electronic money is actually stored in the IT systems of <i>commercial banks</i>.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><b>3) Point out that electronic money is just a number in a bank's computer, attached to your account ID</b></div><div style="text-align: justify;"><div style="text-align: left;"></div><table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody><tr><td style="text-align: center;"><a href="http://s3.cdn.memeburn.com/wp-content/uploads/2012/10/google-data-centre-1.jpg" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="172" src="https://s3.cdn.memeburn.com/wp-content/uploads/2012/10/google-data-centre-1.jpg" width="320" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">DATACENTRE: WHERE YOUR E-MONEY IS STORED</td></tr></tbody></table>To 'store' your electronic money, all the bank really does is maintain an internal <a href="http://en.wikipedia.org/wiki/Ledger">ledger</a>, which is a list that says "Brett has deposited X amount into the bank, and he has received X amount in payments, and he has withdrawn X amount from ATMs, and has paid X amount to other people via electronic payments, and this is how much he has left." And that's the amount you see on your bank statement. Your current bank balance is thus the product of a series of transactions over time that the bank validates and records.<br /><br /><b>4) Then point out that I cannot hold this electronic money in my own computer</b><br />If I had to call Co-Operative Bank up and say, "I have £350 in my account with you. It's currently in electronic form. I'd like to take it out of the bank. Please can you transfer it to me in electronic form, so that I can store it directly on my computer", they'd laugh at me. They'd just say "Sorry Mr. Scott, it's just numbers recorded next to your account ID. We can convert it into cash and give that to you if you come into a branch, but we cannot give it to you in electronic form, unless you could specify another bank where you have another account."</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><b>5) And point out that banks are thus intermediaries that 'keep score' of e-money</b><br />When we make electronic payments with electronic money, what actually happens is that we send a message to our bank to transfer money to someone else's bank. Your bank then records on its ledger that money associated with your account ID is no longer associated with it (has 'left your acccount'), and the other person's bank records that the money can now be associated with the recipient's account (Later the two banks clear it with each other via their reserve accounts at the central bank if necessary). The important point &nbsp;is that I never personally send the electronic money to the recipient and they never personally receive it - intermediaries do it on our behalf.<br /><br />Thus, unlike a physical bank note, there is no 'independent existence' of electronic money. With cash, I could hoard it in a suitcase and count it myself, and show it to other people who agreed it was real. For electronic money to be real though, we rely on a bank to say "yes, Brett originally had £400 in here, and then someone sent him £50, and now he has £450, and then he sent £100 to someone, and now he has £350." We rely on the intermediary to maintain accurate 'score' of our electronic money on its ledger so that I can look on my statement and see an amount I apparently have.<br /><br /><b>6) Bring up the issue of double-spending of e-money, and how banks prevent it</b><br />Let's say my current electronic money balance in my bank account is £15. If I went onto Amazon and spent that on an <a href="http://www.amazon.co.uk/gp/product/0745333508/ref=as_li_ss_tl?ie=UTF8&amp;camp=1634&amp;creative=19450&amp;creativeASIN=0745333508&amp;linkCode=as2&amp;tag=suitpossum-21">awesome financial activism book</a>, and then 5 seconds later tried to spend the same £15 on second-hand shoes from Gumtree, that would be an attempt to double-spend electronic money. My bank though, would quickly clock on to the fact that on their internal ledger I only have £15, and that the latter attempted Gumtree payment is thus invalid, at which point they'd reject or reverse it. Thus, there is a 'time-based priority system' in which the first payment is the legitimate one, and can be validated, and the latter is illegitimate, and will not be validated. Only bank intermediaries have the birds-eye view to mediate attempted electronic payments by 'timestamping' them, like a clerk saying "this payment came first, and then this one, but only the first one is valid, because the account does not have a high enough score to complete the second payment".<br /><br /></div><div style="text-align: justify;"><b>7) Point out that a trusted intermediary is thus required in order to maintain 'realness' of electronic money</b></div><div style="text-align: justify;">Imagine HSBC could hypothetically find a way to transfer you money in electronic form, so that you personally could store it on your computer. What would that money be? Presumably it would be some type of computer file, but if it was just a computer file, what would there be to stop you just copying and pasting it many times to replicate it? It would be akin to being able to counterfeit money very easily and rapidly. If we were willy-nilly allowed to copy and paste our own electronic money, there would be widespread breakdown in trust in it. If you knew that people kept their electronic money on their own computers, would you trust a payment that came from them, or would you think that maybe they were just creating it whenever they felt like paying someone?<br /><br />A physical banknote has an identity number, and the mint is supposed to maintain 'realness' of the money by validating each bank note as a real one. With electronic money though, we have to trust in the banking system in order to trust in the money. If we believed that Barclays could randomly change the ledger and type in random amounts of money into people's accounts, we wouldn't trust people's bank balances. Banks maintain 'realness' of electronic currency by convincing us that it's basically the same as physical currency, only much more convenient, and that they keep valid score of it on our behalf. (<i>Let's leave aside the complexities of fractional reserve banking for now</i>).</div><div style="text-align: justify;"><br /><b>8) You've now set up the Holy Grail question: Is it possible to create a version of electronic money that, like physical cash, does not require a central intermediary?</b></div><div style="text-align: justify;">Turn to gran and say "So while it's true that I can send cash in an envelope to someone in Hong Kong, how could I do the same with electronic currency without having banks acting as central intermediaries in the process?" Gran ain't stupid, and she knows where you're going with this. She yells "<i>Ta da</i>, enter Bitcoin!"</div><div style="text-align: justify;"><br /><br /></div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="http://fc02.deviantart.net/fs70/f/2013/088/b/2/bitcoin_facebook_header_by_neo23x0-d5znk97.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="183" src="https://fc02.deviantart.net/fs70/f/2013/088/b/2/bitcoin_facebook_header_by_neo23x0-d5znk97.jpg" width="500" /></a></div><br /><br /><b>9) Leap up and shout "Yes Granny, what is required is a decentralised intermediary!"</b><br />Let's cut straight to the chase. Bitcoin is a system to replace a centralised banking intermediary (that we have to trust to accurately record electronic money transactions), with a decentralised intermediary that we don't have to trust. That decentralised intermediary is a network of Bitcoin users.<br /><br /><b>10) Start from a hypothetical bitcoin payment. Explain that I must do a 'shout out' to the Bitcoin network, asking &nbsp;them to validate, and then record, the transaction</b><br />Ignore for a moment how the bitcoins enter circulation, and go straight into describing a transaction. In an ordinary bank-mediated electronic payment, you'd say "I want to pay £25 from my Co-Operative Bank account to Mr. Jones' HSBC bank account, please transfer the money" and the two banks involved would record it on their ledger, first checking to see if you actually had enough to pay that, leaving you with a residual amount in your account. Let's now imagine you have 3 bitcoins (ignore for a moment where they are stored). It's like having a positive balance in your normal bank account. In the Bitcoin system, there are no people's names, there are only numbered addresses, called Public Keys. This is just an identification number, and any bitcoins in the system are attached to (or belong to) particular public keys, which in turn belong to actual people. If I want to spend bitcoins, I must first broadcast an electronic message to the Bitcoin network saying something roughly like:<br /><ul><li>"Hello I am Public Key 191Zh2XUc54EMNZcbkchVfApNQrBjL4Zb3</li><li>I wish to transfer 1 Bitcoin to Public Key 1M9fzriM7DgxDfGEhKqD2takTkXziqPkYF</li><li>Please check this and record it on the ledger".</li></ul><br /><b>11) Explain what the ledger is</b><br />But wait, what is this ledger? In an ordinary bank, the ledger they record your transactions onto is an internal list, almost like an excel spreadsheet. Take a look at your printed bank statement: It starts with an Opening Balance, then lists a bunch of transactions, and then ends with a Closing Balance. Commercial banks hold millions of these ledgers to record the history of money in each account. Now imagine all those were melded into one giant interconnected ledger showing all transactions that had ever occurred between users of a particular electronic currency. In the case of Bitcoin, this ledger is called the <i>Blockchain</i>. It is just a computer file that gets constantly updated, and it is held on the computers of everyone in the Bitcoin network.<br /><br /><b>12) And explain that it is built and maintained by a network of 'clerks' called Miners</b><br />As proposed transactions (like the one in No.10 above) are broadcast, the Bitcoin network collects them them into neat cohorts called blocks (a block of transactions), which are (figuratively speaking) dropped onto the virtual desk of a decentralised network of clerks who go about checking that they are&nbsp;legitimate (picture a decentralised version of a giant room of clerks receiving big dumps of transaction slips to process). This is called 'mining'.<br /><br /><div><b>13) If granny asks "Why's it called <i>mining</i> rather than <i>checking</i>", you say:</b></div>Perhaps the most elegant aspect of Bitcoin is that to reward people for the arduous task of validating and recording transactions in Bitcoin, they can get rewarded with new Bitcoins. The system is built such that you mine new bitcoins by checking that old bitcoin transactions are legitimate, and it's thus a currency that grows in the process of people trying to maintain its integrity. Moreover, the people in the network actually<i> compete</i> to validate the transactions, lured by the prospect of being rewarded with new bitcoins. So unlike a single central intermediary, where all clerks would be theoretically just be paid salaries to do the drudge work, this is a decentralised intermediary made up of competing mercenary-like clerks, paid only if they succeed.<br /><br />You can see this process in action at&nbsp;<a href="http://blockchain.info/">http://blockchain.info</a>:<br /><ul><li>If you look at the bottom of the webpage, you'll see the latest transactions that are being broadcast to the network. If you click on one of them, you'll see they are unconfirmed (i.e. transactions waiting to be validated by the 'clerks')</li><li>If you look at the top of the page, you'll see the latest <i>blocks</i> of transactions that have been confirmed, each with an ID number, and the number of transactions contained within it (e.g. <a href="http://blockchain.info/block-index/374065/00000000000000f9163be9861b6db42c064054f99cdfc24425389b5a5f4bd07a">Block 232412</a> contains 165 transactions and was confirmed by <a href="http://www.btcguild.com/">BTC Guild</a>, a mercenary group of collaborating miners. You can also see that they've been awarded with 25 new bitcoins as a reward for validating the block)</li><li>On average it takes 10 minutes for new transactions to be validated and included into a block. This means that if you make a bitcoin payment, you'll have to wait for a little while before the payment is confirmed and embedded into the blockchain record</li></ul><br /><b>14) Granny looks puzzled. She asks "but how do these miners/clerks check the transactions and why is it so arduous that they have to be rewarded with new bitcoins to incentivise them?"</b><br /><div style="text-align: right;"></div>Yeah, this is where it gets a bit more complex. You want to convey the basic point that the validation process has to be difficult enough that no renegade power group (like the CIA for example) could game the system, but this is also where some of the more advanced cryptography comes in. Even if you understand the cryptography, it's probably unnecessary to explain it in any depth to your grandmother. If she wants to know more, refer her to the <a href="http://bitcoin.org/bitcoin.pdf">original document</a> by Satoshi Nakomoto, and perhaps to this <a href="http://crypto.stanford.edu/~xb/fc12/bitcoin.pdf">useful paper</a> from Stanford. Just reiterate that as the transaction 'shout-outs' (described in No.10) are received by the network, the miners/clerks must exert a lot of computing power into checking that the people attempting to make payments have enough bitcoins credits to do so (by checking the existing ledger of transactions) and must then update the ledger with these new payments (kind of like saying "OK, it appears your opening balance was this, and you are indeed able to spend this amount of bitcoins, so we'll add the transaction to the blockchain, and now your closing balance is this"). Reiterate that the transactions are validated in groups called blocks, and that when the validation is complete, the block is then added to the blockchain (chain of blocks strung together = blockchain).<br /><br /><b>15) Which leads to the obvious point that the blockchain thus gets longer over time</b><br />The blockchain, being a historical record of all the transactions accepted by the community, thus gets bigger as the transactions go on. Check out a visual representation of its increasing size <a href="http://blockchain.info/charts/blocks-size">here</a>.<br /><br /><b>16) Now the key point to put it all together: The Blockchain is a historical list of transactions, and &nbsp;is thus also the list of outstanding coins</b><br />This is the piece that most trips me up. It seems counterproductive to think of bitcoins as 'things', as if they were like metal coins. The only obvious 'things' in the Bitcoin world are the blockchain and peoples' public key IDs. A bitcoin payment, and the resulting shift in the balances associated with two bitcoin IDs, has 'happened' only once it is recorded on the blockchain by network members that are mining. In other words, it's not like the transaction first occurs and is then later recorded (a bit like me giving someone cash and then later recording it). It is in fact the very act of recording that changes the coin balances, or <i>makes the transaction real</i>.<br /><br />Payment is thus an act of public recording, not an act of private giving. Using this system, I am able to pay someone in Spain using a simple internet connection to give an electronic shout-out to a public network. After 10 minutes or so the recipient will see the changes reflected in the blockchain, and&nbsp;<i>voila</i>&nbsp;they have received their bitcoins from you.<br /><br />Thus, my 'coins' actually reside in, or are implied in, the historical record of the blockchain. The blockchain started from the very first '<a href="http://blockexplorer.com/block/000000000019d6689c085ae165831e934ff763ae46a2a6c172b3f1b60a8ce26f">genesis block</a>' (Block No.0) created by Satoshi Nakomoto, and has since then recorded the creation of new coins, and which public key they belong to. It is a collaboratively-built knowledge bank that holds the record of the amounts each public key has received and spent, and thereby how many coins can be attributed to each public key. Much like your current bank balance is merely the result of the bank having a centralised ledger to record transactions in and out of the account, your bitcoin balance is merely the residual product of changes recorded in the decentralised blockchain ledger. All I have on my computer is a public key which says that I am the rightful owner to a part of that history. My public key is like the key to a virtual, decentralised safe-deposit box facility, and if I lose access to it, I lose access to my claims to the coins attributable to my public key in the blockchain.<br /><br /><b>17) Some final musings: In what way is Bitcoin peer-to-peer?</b><br />People frequently call Bitcoin a <i>peer-to-peer</i> electronic currency, which could easily imply that you could send bitcoins directly to someone else with no third party involved. As you can see though, there is a third party involved. It's just that the third party is a decentralised network of people rather than a single centralised institution like a bank. It is 'peer-to-peer' in the sense of being a payment system under the control of no single institution, but it involves more than just two parties to a transaction.<br /><br /><div><div class="separator" style="clear: both; text-align: center;"></div><b>Sorry gran</b><br />Ok, so that's the opening gist of it, and I'm really not sure how many grandmothers would understand this. Even if they did though, the first question that would pop into their wise heads is "Ok my dear, it's all very well to have a clever system like this to validate transactions undertaken in this currency, but you still haven't explained why Bitcoin has value." Right on Gran. That's a much more subtle question entirely. I have my theories about that, and particularly about the&nbsp;<a href="http://suitpossum.blogspot.co.uk/2012/06/block-chain-of-infinite-mystery-what.html">quasi-mystical underground hype that initially gave Bitcoin value</a>&nbsp;(see the section called 'The mojo of Nakamoto). If I were you, I'd take a seat and listen to the words of warning your gran may have. Bitcoin indeed is pretty amazing, but it has also attracted a lot of hype from a lot of ideologues. I'd recommend ignoring them and taking time to think clearly about this yourself.</div></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"></div><b>End Note: This is an ongoing Wiki Project</b><br />As mentioned at the beginning, I'm not a Bitcoin expert and this is still a work in progress. My main concern is how to find clear ways to explain things in intuitive ways to people. If you have ideas for how I can do so more accurately and effectively, please let me know!<br /><br /><br /><hr style="background-color: white; color: #0a0000; font-family: Arimo; font-size: 14px; line-height: 19.6000003814697px; text-align: left;" /><h3 style="background-color: white; color: #0a0000; font-family: Arimo; margin: 0px; position: relative; text-align: left;"></h3><h3 style="background-color: white; color: #0a0000; font-family: Arimo; margin: 0px; position: relative; text-align: left;">Some things to do if you enjoyed this article...</h3><div style="background-color: white; color: #0a0000; font-family: Arimo; font-size: 14px; line-height: 19.6000003814697px; text-align: left;">I sometimes spend weeks writing these articles, and don't generally get paid to do it, so if you enjoyed please consider doing one or two of the following</div><ol style="background-color: white; color: #0a0000; font-family: Arimo; font-size: 14px; line-height: 19.6000003814697px; text-align: left;"><li style="margin: 0px 0px 0.25em; padding: 0px;">Support by&nbsp;<a href="http://suitpossum.blogspot.co.uk/p/support.html" style="color: #ff9900; text-decoration: none;">buying me a virtual beer</a></li><li style="margin: 0px 0px 0.25em; padding: 0px;">Submit to&nbsp;<a href="http://www.reddit.com/" style="color: #ff9900; text-decoration: none;">Reddit</a></li><li style="margin: 0px 0px 0.25em; padding: 0px;">Link to the article from your own blog so your readers can see it too</li></ol></div></div><img src="http://feeds.feedburner.com/~r/SuitpossumFragmentsOfFinancialSubversion/~4/q2u49sIRlAs" height="1" width="1" alt=""/>Brett Scotthttps://plus.google.com/113072710534870591381noreply@blogger.com37http://suitpossum.blogspot.com/2013/04/how-to-explain-bitcoin-to-your.html